- Significant Depreciation: 47% against the US dollar since its introduction
- Market Discrepancies: A premium of around 55% was observed in the black market shortly after the Zimbabwe Gold's launch
- Future Projections: Economic forecasts indicate a potential 52% decline in the Zimbabwe Gold's value by 2025
Harare- The local currency has experienced a 47% depreciation against the US dollar since its introduction, as reported by the Reserve Bank of Zimbabwe (RBZ).
The Zimbabwe Gold (ZiG) is now trading at a rate of 1:25.65 against the US dollar, a significant drop from its initial value of 1:13.56.
The introduction of the ZiG followed a rapid depreciation of the local currency, which plummeted to ZWL 32,000 per dollar by the end of March, down from approximately 1:6 in 2019 when it was known as RTGS. This situation prompted officials to replace the currency with the Zimbabwe Gold, which was promoted as a potential solution to Zimbabwe's enduring economic challenges.
The ZiG commenced trading at 13.56 on April 5; however, it quickly garnered a premium of around 55% in the black market, compelling authorities to enforce measures that mandated commerce to accept a pegged rate of 13.56.
As the premium continued to widen between the parallel and formal markets—driven by a mismatch between the local currency and foreign reserves—the government was forced to adjust the currency rate on September 26 to 1:25, reflecting a significant overnight depreciation of 43%.
At the time of this adjustment, suppliers were utilising a rate approaching ZWL 32 per dollar, with the premium nearing 90%, reflecting the severity of the currency’s collapse.
The primary challenge has been fiscal indiscipline, which has triggered exchange rate volatility as the government injected liquidity into the market in preparation for the SADC Summit.
This resulted in a significant increase in the money supply of the local currency against limited demand, as most products and services were indexed for value preservation.
Highlighting the currency crisis, projections indicate the ZiG may suffer an overall decline of 52% in 2025, suggesting a volatile economic environment ahead.
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