Thu Sep 19 08:05:34 UTC 2024: ## Zimbabwe’s New Currency Struggles to Gain Traction Amidst Foreign Reserve Concerns

**HARARE** – Zimbabwe’s new gold-backed currency, the ZiG, is facing significant pressure just five months after its launch, raising concerns about the government’s ambition to make it the sole currency by 2026. The ZiG, the country’s sixth attempt at a stable currency in 15 years, has lost nearly 80% of its value on the black market since its introduction in April.

The Zimbabwean central bank has attributed the currency’s decline to increased demand for U.S. dollars, largely driven by rising grain imports. The bank injected $64 million into the foreign exchange market this month to address the dollar shortage, following a $50 million injection in July.

Despite the central bank’s interventions, experts express skepticism about the ZiG’s future. Independent economist Prosper Chitambara cites a lack of public confidence in the new currency, while street vendors and businesses are wary of its instability and prefer transacting in U.S. dollars.

While the Reserve Bank’s Monetary Policy Committee member, Persistence Gwanyanya, maintains that it is too early to pronounce the ZiG a failure, he acknowledges the need for greater government intervention to increase its adoption. He suggests charging more taxes in the local currency to incentivize its use.

However, market traders remain unconvinced. “The ZiG has been getting weaker, so it doesn’t make business sense to transact with it,” says Maynard Maketo, a street hawker. “I do not have faith in the ZiG. We have been here before with the Zimdollar.”

Despite the challenges, central bank officials remain optimistic about the ZiG’s long-term prospects, emphasizing the need for building trust in the currency. Whether the ZiG can overcome its current struggles and achieve its intended role in Zimbabwe’s economic landscape remains to be seen.

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