INTERNEWSTIMES.COM – Zimbabwe’s latest attempt to tame its volatile economy has hit a major snag. The country’s gold-backed currency, the “Zig,” has been devalued by a staggering 40% against the US dollar, a move that signals trouble for the nation’s financial stability.
The Reserve Bank of Zimbabwe (RBZ) announced the drastic rate adjustment on Friday, setting the exchange rate at 24 Zigs to $1. This decision was driven by surging demand for the US dollar, which is also legal tender in Zimbabwe. The move comes after large retailers warned of potential store closures if the exchange rate remained fixed.
The Zig, introduced just six months ago, was considered Zimbabwe’s last-ditch effort to stabilize its currency after a tumultuous history of economic instability. The country has seen five different currencies in the past 25 years, leaving its citizens deeply distrustful of the central bank.
While the Zig initially maintained its value on paper, the black market, where businesses primarily secure US dollars, saw its value plummet by more than half. This highlights the ongoing struggle to wean Zimbabweans off the US dollar, as there has been no reliable alternative for citizens.
The RBZ claims the devaluation aims to create greater exchange rate flexibility, address “emerging exchange rate risks,” and stabilize prices. However, this move further underscores the fragility of Zimbabwe’s economy and the ongoing challenges it faces in stabilizing its currency. (RED)
