Rapid improvement in Zimbabwe’s currency stability thanks to the new gold-backed ZiG currency.
Zimbabwe has faced one of the most turbulent currency crises in history.
The introduction of the ZiG currency, backed by gold, has brought a surprising and rapid turnaround, stabilizing the economy and reducing inflation.
The Troubled History of Zimbabwe’s Currency
Zimbabwe’s currency woes began in the early 1980s.
The Zimbabwe dollar replaced the Rhodesian dollar but started losing value significantly in the 1990s. By 2006, hyperinflation forced the government to redenominate the currency at an exchange rate of 1,000 to one.
The situation worsened in 2008 when the currency was redenominated again at 10 billion to one. By 2015, a U.S. dollar equaled 35 quadrillion Zimbabwe dollars.
In 2016, bond notes backed by U.S. dollars were introduced but failed to stabilize the currency due to excessive printing. Inflation soared, and foreign currencies became the main medium for transactions.
Introduction of the Gold-Backed ZiG Currency
In a bold move, Zimbabwe introduced the Zimbabwe Gold (ZiG) currency, converting domestic dollar balances into ZiG balances.
This currency is backed by significant gold reserves, a shift from highly inflated fiat money to a more stable, specie-backed currency. The central bank recalibrated the main interest rate to 20%, down from 130%.
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