By Costa Nkomo
President Emmerson Mnangagwa has addressed the ongoing turmoil surrounding Zimbabwe’s five-month-old gold-backed currency, the Zimbabwe Gold (ZiG), while defending its backing by gold reserves.
This comes in the wake of the Reserve Bank of Zimbabwe’s (RBZ) decision last Friday to devalue the currency by over 40%, leaving many citizens, particularly civil servants, reeling from the loss of savings.
The drastic devaluation has rekindled painful memories of the 2008 economic collapse when the Zimbabwean dollar disintegrated.
Delivering his State of the Nation Address (SONA) as he officially opened the Second Session of the 10th Parliament to the joint sitting of the National Assembly and Senate at the Parliament Building in Mt Hampden, Wednesday, Mnangagwa reassured the nation of his administration’s commitment to supporting the ZiG despite widespread concerns.
“The government remains committed to backing the currency by allocating 50% of royalties towards building reserves,” Mnangagwa said.
Addressing the rising concerns over the currency’s volatility, the president acknowledged the growth of parallel market activities, which he attributed to speculative behaviour.
“We are concerned about the resurgence of parallel market activities driven by speculation. We are instituting corrective measures to protect all Zimbabweans from economic disruptions,” Mnangagwa stated.
He further highlighted that the government has introduced increased flexibility in the foreign exchange market to encourage broader participation and improve the transparency of exchange rates.
“The increased flexibility in the foreign exchange market is expected to enhance price discovery and encourage foreign exchange holders to engage in the willing-buyer, willing-seller market,” Mnangagwa explained.
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