By Costa Nkomo
The government has announced plans to implement new measures aimed at addressing systemic issues in the financial market that are contributing to the Zimbabwe Gold (ZiG) devaluation.
ZiG has plummeted on the black market, trading at a staggering US$1:24.
Acting President Constantino Chiwenga announced that the government will implement new measures to address systemic gaps in the financial market that are contributing to the ZiG’s devaluation.
Chiwenga urgently called on Zimbabweans to embrace their local currency, as many businesses are beginning to reject it. This reluctance has resulted in rising prices for goods and commodities, making life increasingly difficult for citizens.
During his address at the burial of Brigadier General (Retd) Shadreck Ndabambi at the National Heroes Acre in Harare on Wednesday, Acting President Chiwenga noted that the government will introduce measures to curb arbitrage in the exchange market.
“Let me assure you that the government is working to promote the wider use of our local currency and is putting in place measures that will eliminate gaps that are creating arbitrage opportunities in the exchange market,” Chiwenga stated.
He further added, “The government will continue to monitor the operations of our financial markets and promote efforts to grow and stabilize our national currency.”
Chiwenga implored Zimbabweans to rally behind the local currency, which has been largely rejected by private businesses. He stressed, “No nation will develop without sovereign control, defence, and growth of its national currency. Our government introduced the Zimbabwe Gold as our new sovereign currency.”
“It is our responsibility as a nation to embrace and protect the new currency as a bedrock and anchor of our economic development.”
Renowned economist Professor Gift Mugano expressed that if the central bank and the government had heeded his advice, the country’s currency situation might have been different.
“I advised that the government must create a demand for ZiG by allowing all government services including passports, fuel, taxes etc to be paid in ZiG so that people are persuaded to keep it. But the government is first entity to reject its own money. They dont want ZiG in fuel and passports so the market is following suit.
Secondly, I advised that you cannot back a currency by 2.5 tonnes of gold. You need at least US$4.5 billion dollars. There were not enough reserves and this is the reason the ZiG is falling.
Thirdly, there is no confidence in the market. No confidence no currency. Zanu PF should not fool itself. It needs the opposition to make things work. The toxic politics is affecting the economy. We need each other.”
The central bank introduced the ZiG currency in April, following the collapse of RTGs. Just five months later, the new currency has significantly plummeted, reaching a record low of US$1: 24. At the time of its introduction, the ZiG was trading at US$1: 13.50.
