The Reserve Bank of Zimbabwe is confident that the gold-backed Zimbabwe Gold (ZiG) currency will stand strong against major currencies. RBZ Governor John Mushayavanhu emphasized its stability through effective monetary policies, while highlighting efforts for de-dollarisation by 2030. The liberalized pricing system allows economic agents to set their own prices, further supporting the ZiG’s performance.
The Reserve Bank of Zimbabwe (RBZ) remains optimistic about the Zimbabwe Gold (ZiG) currency’s ability to compete with major currencies such as the United States dollar. During a recent Tourism Business Council of Zimbabwe (TBCZ) event, RBZ Governor John Mushayavanhu defended the ZiG, asserting that the robust monetary policies implemented are responsible for its stability. He stated, “The ZiG to USD rate is firming up,” indicating that confidence in the local currency is a primary goal of the central bank.
Introduced in April of last year, the ZiG was established amidst significant exchange rate fluctuations and soaring inflation. The RBZ has adopted strict monetary policies, including high interest rates, to deter speculative borrowing. Governor Mushayavanhu expressed that the bank is committed to ensuring the ZiG’s long-term stability, aiming to position it as a fundamental aspect of the economy. He reiterated that de-dollarisation efforts are progressing towards the goal of a mono-currency system by 2030.
Business leaders and economists acknowledge the unsustainability of the US dollar-based currency regime, as it hampers local goods’ competitiveness internationally. The limited availability of US dollars also restricts the RBZ’s capacity to apply monetary policy effectively. To promote confidence in the ZiG, the RBZ has granted economic agents the liberty to set prices independent of the official exchange rate. Mushayavanhu advised that the market can determine prices without adhering to the RBZ’s rates.
This liberalized pricing approach permits companies to select exchange rates reflective of market conditions. The RBZ governor noted that businesses would not face penalties for using rates other than the official exchange rate, as long as their pricing remains reasonable. He cautioned that any attempts by economic agents to manipulate the market with unrealistic exchange rates would lead to their competitive disadvantage.
Furthermore, the governor indicated that some fuel traders are already negotiating with the RBZ to offer fuel for sale in ZiG, aiming to fulfill local demands. He emphasized the importance of avoiding a return to fuel shortages and long queues, signaling that policy decisions will prioritize economic stability. RBZ Deputy Governor Innocent Matshe stated that the expected realistic exchange rate is US$1/ZiG22, which they believe the market will accept.
In summary, the Reserve Bank of Zimbabwe remains committed to fostering confidence in the gold-backed ZiG currency through robust monetary policies and a liberalized pricing system. With a clear goal of achieving currency stability and reducing reliance on the US dollar by 2030, the central bank is hopeful about the ZiG’s long-term viability in the economic landscape of Zimbabwe.
Original Source: www.newzimbabwe.com
