Zimbabwean ZiG

Last updated
Zimbabwe Gold
ZiG
ZiG Coins.jpg
New coins
ISO 4217
CodeZWG (numeric:924)
Subunit 0.01
Unit
PluralZiG
Symbol ZiG
Denominations
Subunit
1100 cent
notionally only; cents are not used in any denomination
Banknotes
Freq. usedZiG10, ZiG20
Rarely usedZiG50, ZiG100, ZiG200 (not issued yet)
CoinsZiG110, ZiG14, ZiG12, ZiG1, ZiG2, ZiG5 [1]
Demographics
Date of introduction8 April 2024;9 months ago (2024-04-08) [2]
Replaced Zimbabwean dollar
User(s)Flag of Zimbabwe.svg  Zimbabwe
Issuance
Central bank Reserve Bank of Zimbabwe
Website www.rbz.co.zw

The Zimbabwe Gold (ZiG; code: ZWG) [3] is the official currency of Zimbabwe since 8 April 2024, [2] backed by US$575 million worth of hard assets: foreign currencies, gold, and other precious metals. [4] [5] [6] It replaced the Zimbabwean dollar, which suffered from rapid depreciation, with the official exchange rate surpassing 30,000 Zimbabwean dollars per U.S. dollar on 5 April 2024, whilst the parallel market rate reached 40,000 per U.S. dollar. [7] Annual inflation in Zimbabwe hit 55.3% in March 2024. [8]

Contents

The ZiG is notionally divided into 100 cents, which were first used by the Zimbabwe Stock Exchange before the currency had an ISO code. Cents were officially recognized by the Reserve Bank of Zimbabwe when a currency code for the Zimbabwe Gold was introduced in June 2024. [9] However, the smallest coin is a 1 ZiG. [10]

Although the rate of devaluation of the ZiG may vary, [11] the ZiG has consistently lost value since its introduction, and its long-term prospects are dim so long as large grain imports continue and the government continues to overspend. [12] [13] As of November 2024, Zimbabwe had US$21 billion in external debt. [14]

Background

The ZiG currency was announced on 5 April 2024, taking the name from ZiG digital tokens, which are now available as GBDT. [15] The ZiG is Zimbabwe's sixth attempt since 2008 at creating a new currency that will make it independent of the US dollar. [16]

Since the currency crisis of 2008–2009, Zimbabwe has a multi-currency system. It was introduced in 2009 after the hyperinflation of the fourth Zimbabwean dollar (ZWL). For ten years there was no Zimbabwean currency. However in February 2019 the government introduced the Zimdollar (ZWL) on par with the US dollar, but it was quickly devalued to $2.50 Zimdollars per US-dollar. [17] Briefly, from June 2019 to March 2020, the government required all transactions to be done in Zimdollars; but that quickly proved impractical. [18] Legal use of foreign currencies was restored and they remain legal tender. [19]

By April 2024, the value of the Zimdollar (the RTGS Dollar) had decreased by 99.9% to over one US-dollar equaling $30,000 Zimdollars officially, and even more on the black market. [7] At that time, U.S. dollars accounted for four-fifths of all transactions. [20]

History

In discussions the government decided to issue a new currency backed by gold reserves, the ZiG. [21]

Originally established at $2.50 ZiG to one USD, the ZiG began trading on April 8 at an exchange rate of 13.56 ZiG to one USD. [22] Since its launch, the proportion of transactions conducted in USD has declined from 85% to 70%. [20] The government and the central bank expect the use of ZiG to increase in the country gradually. As an incentive, companies are required to pay fifty-percent of their quarterly taxes in ZiG. [23] [24] However, market forces have caused even the government to fail to switch to the new currency. Gift Mugano, a visiting professor of economics at the University of Zimbabwe Business School, said, "The government is [still] refusing its own money to pay for passports, fuel and other services." [25]

By October, 2024, after the first six months of trading, the ZiG had officially lost half its value (27 ZiG to 1 USD), but suffered a seventy-five percent loss on the unregulated market (50 ZiG to 1 USD). [26] In response, in late September the Monetary Policy Committee (MPC) of the Reserve Bank of Zimbabwe tightened monetary policies with the effect of halting further depreciation, at least so far. [27] [28]

Features

The Reserve Bank of Zimbabwe, over the weekend of 6 April to 7 April 2024, released the currency features.[ citation needed ]

Denominations

Banknotes

Banknotes of Zimbabwe Gold were announced in eight denominations: 1, 2, 5, 10, 20, 50, 100, and 200 ZiG; however, a later announcement stated that the 1, 2, and 5 ZiG denominations would instead be issued in coin form. They began circulating on 30 April 2024. [5] [29]

The ZiG notes are made from cotton paper, have the Zimbabwe Bird as their watermark, and are all equal in size, measuring 155 mm × 65 mm (6.1 in × 2.6 in).

According to a NewsDay article dated 31 May 2024, Governor John Mushayavanhu said that the Reserve Bank of Zimbabwe will not introduce 50 or 200-ZiG notes anytime soon as it fears that the bigger notes will fuel inflation. The notes have been printed and delivered. "We have introduced most of the cash denominations that we said we were going to. We have got ZiG1, ZiG2, ZiG5, ZiG10 and ZiG20 in circulation now," said Mushayavanhu. Only the 10 and 20-ZiG denominations have been confirmed to be issued as notes; the lower denominations are presumed to be coins. There was no word on the fate of the 100 ZiG note.

ValueDimensionsMain colourObverseReverseWatermarkDate ofRef.
printingissue
1 ZiG155 × 65 mmBlue Balancing rocks of Zimbabwe with treesLiquid gold being moulded on top of a stack of 12 gold bars Zimbabwe Bird and "RBZ"2024not issued [30]
2 ZiG155 × 65 mmGreen
5 ZiG155 × 65 mmPink
10 ZiG155 × 65 mmNavy blue30 April 2024
20 ZiG155 × 65 mmPeach and green13 May 2024
50 ZiG155 × 65 mmBrownTBA
100 ZiG155 × 65 mmOlive greenTBA
200 ZiG155 × 65 mmRedTBA
For table standards, see the banknote specification table.

Coins

The coins came in several forms: 1 ZiG, 2 ZiG, 5 ZiG. They were introduced on 30 April 2024, along with the banknotes. [31] [32]

There are plans to introduce also coins for 110 ZiG, 14 ZiG, and 12 ZiG as well.

Banknotes of the same denominations will not be released.

Conversions

Exchange rates

The Zimbabwean dollar (ZWL) lost about 32% value on interbank in two-day trading, moving from 22,950 to 33,903 per U.S. dollar. The conversion to ZiG was based on gold price and swap rate. [33] [34] On a press release dated 6 April 2024, the Reserve Bank of Zimbabwe announced that ZWL would be converted to ZiG at an exchange rate of 2498.7242 ZWL for one ZiG. [35] [36] Zimbabweans were given 21 days to convert their cash into ZiG. [37]

The ZiG started trading on 8 April 2024 with an exchange rate of 13.56 ZiG per US dollar and was subsequently allowed to freely float. [38]

As a result of inflation, on 27 September 2024, the RBZ devalued the ZiG by 42.55% against the US dollar. [39] In the month of September, 2024, consumer prices rose by 37.2% in ZiG terms, compared to just 0.7% in USD terms during the same period. This was compared to a 5.8% rise in ZiG prices over the course of the month before (August). [40]

Zimswitch and banks

All banks and financial institutions were instructed to convert all ZWL balances, obligations, and accounts to the new currency, ZiG. [2]

See also

Related Research Articles

<span class="mw-page-title-main">Economy of Zimbabwe</span>

The economy of Zimbabwe is a gold standard based economy. Zimbabwe has a $44 billion dollar informal economy in PPP terms which translates to 64.1% of the total economy. Agriculture and mining largely contribute to exports. The economy is estimated to be at $73 billion at the end of 2023.

Seigniorage, also spelled seignorage or seigneurage, is the difference between the value of money and the cost to produce and distribute it. The term can be applied in two ways:

<span class="mw-page-title-main">Venezuelan bolívar</span> Currency

The bolívar is the official currency of Venezuela. Named after the hero of South American independence Simón Bolívar, it was introduced by President Guzman Blanco via the monetary reform of 1879, before which the venezolano was circulating. Due to its decades-long reliance on silver and gold standards, and then on a peg to the United States dollar, it was long considered among the most stable currencies.

<span class="mw-page-title-main">Vietnamese đồng</span> Currency of Vietnam

The dong has been the currency of Vietnam since 3 May 1978. It is issued by the State Bank of Vietnam. The dong was also the currency of the predecessor states of North Vietnam and South Vietnam, having replaced the previously used French Indochinese piastre.

<span class="mw-page-title-main">Somali shilling</span> Currency of Somalia

The Somali shilling is the official currency of Somalia. It is subdivided into 100 senti, cents (English) or centesimi (Italian).

<span class="mw-page-title-main">History of the rupee</span>

The history of the rupee traces back to ancient times in the Indian subcontinent. The mention of rūpya by Pāṇini is seemingly the earliest reference in a text about coins. The term in Indian subcontinent was used for referring to a coin.

<span class="mw-page-title-main">Reserve Bank of Zimbabwe</span> Central Bank of Zimbabwe

The Reserve Bank of Zimbabwe is the central bank of Zimbabwe and is headquartered in Harare.

<span class="mw-page-title-main">Gideon Gono</span> Zimbabwean banker

Gideon Gono is a former Governor of the Reserve Bank of Zimbabwe, serving from 2003 to 2013, and is the former CEO of the CBZ Bank Limited.

<span class="mw-page-title-main">Metallism</span> Economic principle

Metallism is the economic principle that the value of money derives from the purchasing power of the commodity upon which it is based. The currency in a metallist monetary system may be made from the commodity itself or it may use tokens redeemable in that commodity. Georg Friedrich Knapp (1842–1926) coined the term "metallism" to describe monetary systems using coin minted in silver, gold or other metals.

<span class="mw-page-title-main">Hyperinflation in Zimbabwe</span> Period of currency instability

Hyperinflation in Zimbabwe is an ongoing period of currency instability in Zimbabwe which, using Cagan's definition of hyperinflation, began in February 2007. During the height of inflation from 2008 to 2009, it was difficult to measure Zimbabwe's hyperinflation because the government of Zimbabwe stopped filing official inflation statistics. However, Zimbabwe's peak month of inflation is estimated at 79.6 billion percent month-on-month, 89.7 sextillion percent year-on-year in mid-November 2008.

<span class="mw-page-title-main">United States dollar</span> Currency

The United States dollar is the official currency of the United States and several other countries. The Coinage Act of 1792 introduced the U.S. dollar at par with the Spanish silver dollar, divided it into 100 cents, and authorized the minting of coins denominated in dollars and cents. U.S. banknotes are issued in the form of Federal Reserve Notes, popularly called greenbacks due to their predominantly green color.

<span class="mw-page-title-main">Banknotes of Zimbabwe</span> Official currency of Zimbabwe

The banknotes of Zimbabwe were physical forms of Zimbabwe's first four incarnations of the dollar, from 1980 to 2009. The banknotes of the first dollar replaced those of the Rhodesian dollar at par in 1981, one year after the proclamation of independence. The Reserve Bank of Zimbabwe issued most of the banknotes and other types of currency notes in its history, including the bearer cheques and special agro-cheques that circulated between 15 September 2003 and 31 December 2008: the Standard Chartered Bank also issued their own emergency cheques from 2003 to 2004.

<span class="mw-page-title-main">Zimbabwean dollar</span> National currency of Zimbabwe from 1980 to 2009

The Zimbabwean dollar was the name of four official currencies of Zimbabwe from 1980 to 12 April 2009. During this time, it was subject to periods of extreme inflation, followed by a period of hyperinflation.

<span class="mw-page-title-main">Zimbabwean bond coins</span>

The Reserve Bank of Zimbabwe began to release Zimbabwean bond coins on 18 December 2014. The coins were supported by a US$50 million facility extended to the Reserve Bank of Zimbabwe by Afreximbank. To date coins worth US$15 million have been struck out of the total $50 million available. The coins were first issued in denominations of 1, 5, 10, and 25 cents and are pegged to the corresponding values in U.S. dollars. A 50 cents bond coin was released in March 2015.

Fidelity Printers and Refiners (FPR) is a Zimbabwean security printing and gold refinery company wholly owned by the Reserve Bank of Zimbabwe. The company was established in 1966. FPR operates from a printing and gold refinery plant located in Msasa Industrial area in Harare and a coin minting facility in Bulawayo.

John Panonetsa Mangudya is a former governor of the Reserve Bank of Zimbabwe. He was appointed in March 2014 by the then Zimbabwean president, Robert Mugabe, and began his tenure as governor on 1 May that year. His second 5 year term ended on 28 March 2024. He succeeded Gideon Gono as the governor of Zimbabwe's central bank and became the nation's 6th substantial exchequer.

<span class="mw-page-title-main">Zimbabwean bonds</span> Form of legal tender near money

Zimbabwean Bonds were a form of legal tender near money released by the Reserve Bank of Zimbabwe which attempts to resolve Zimbabwe's lack of currency. Bonds and were pegged against the U.S. dollar at a 1:1 fixed exchange rate and backed by the country's reserve. Since abandoning the Zimbabwean dollar in 2009 after it went into hyperinflation the country began using a number of foreign currencies including the U.S. dollar, South African rand, British pound and Chinese yuan as a means of exchange. The inability to print these currencies led to a shortage of money with banks issuing limits on withdrawals.

<span class="mw-page-title-main">Zimbabwean dollar (2019–2024)</span> Zimbabwean currency

The Zimbabwean dollar, also known as the Zimdollar or Real Time Gross Settlement (RTGS) dollar, was the currency of Zimbabwe from February 2019 to April 2024. It was the only legally permitted currency for trade in Zimbabwe from June 2019 to March 2020, after which foreign currencies were legalised again.

The Mosi-oa-Tunya is a gold coin introduced in Zimbabwe in 2022 in the context of rising inflation.

Gold-backed digital token, abbreviated as GBDT is an investment instrument used in Zimbabwe. It was formerly known as ZiG, but its name was taken by a newly created gold backed currency, the Zimbabwean ZiG, thus renaming this investment instrument to GBDT. The digital coins are not loanable.

References

  1. "Zimbabwe introduces new 'ZiG' currency - CAJ News Africa". 6 April 2024.
  2. 1 2 3 "Zimbabwe Replaces Battered Dollar With New Gold-Backed Currency Called ZiG". Bloomberg.com. 2024-04-05. Retrieved 2024-04-05.
  3. "ISO 4217 Amendment Number 177" (PDF). SIX Interbank Clearing. Zurich: SIX Group. 20 June 2024. Archived from the original (PDF) on 20 June 2024. Retrieved 20 June 2024.
  4. Chikandiwa, Tafadzwa Mhlanga and Harriet. "US$575m war chest to anchor new currency". The Zimbabwe Independent. Retrieved 2024-04-05.
  5. 1 2 "Zimbabwe Launches New Gold-backed Currency". AFP. 5 April 2024 via Barrons.
  6. Agbetiloye, Adekunle (2024-04-05). "Zimbabwe's new gold-backed currency ZiG to replace its dollar in April". Business Insider Africa. Retrieved 2024-04-05.
  7. 1 2 "Zimbabwe introduces new gold-backed currency to tackle inflation". Al Jazeera. 5 April 2024. Archived from the original on 8 April 2024.
  8. Mutsaka, Farai (5 April 2024). "Zimbabwe introduces new currency as depreciation and rising inflation stoke economic turmoil". The Associated Press. Archived from the original on 7 April 2024. Retrieved 8 April 2024.
  9. Mandivengerei, Paidashe (2024-06-26). "RBZ changes ZiG currency code to ZWG as International Standards Organisation approves certification". NewZimbabwe.com. Retrieved 2024-10-29.
  10. Mushayavanhu, John (23 May 2024). "Press Statement: Issue and Usage of ZiG Coins" (PDF). Reserve Bank of Zimbabwe. Archived (PDF) from the original on 12 June 2024.
  11. Ndlovu, Ray (26 November 2024). "ZiG Currency Turmoil Ebbing Helps Cool Zimbabwean Inflation" . Bloomberg.
  12. "Zimbabwe's ZiG: devaluations won't fix a currency that's in trouble because of government overspending". The Conversation. 21 October 2024. Archived from the original on 1 December 2024.
  13. Chingono, Nyasha (19 September 2024). "Zimbabwe's new currency faces headwinds five months on". Reuters.
  14. Ndlovu, Ray (6 November 2024). "Zimbabwe to Hold Talks on $21 Billion Debt Albatross This Month" . Bloomberg.
  15. "Zimbabwe gets new currency: ZiG, to restore stability". The Chronicle. 6 April 2024. Archived from the original on 8 April 2024. Retrieved 6 April 2024.
  16. Huileng, Tan (9 April 2024). "Zimbabwe just introduced a new gold-backed currency in an attempt to fight inflation and wean off the US dollar". Business Insider. Archived from the original on 12 April 2024. Retrieved 12 April 2024.
  17. Winning, Alexander (25 February 2019). "Analysis: Zimbabwe struggles to convince doubters as it launches new currency". London: Thomson Reuters. Reuters. Archived from the original on 2 May 2019.
  18. Matiashe, Faral (15 April 2020). "Zimbabwe is on lockdown, but money-changers are still busy". Al Jazeera. Archived from the original on 16 April 2020.
  19. "Zimbabwe extends multi-currency system to 2030". Reuters. 27 October 2023. Archived from the original on 11 November 2023. Retrieved 24 March 2024. "Settlement of any transaction or payment for goods and services in foreign currency, shall ... be valid until the 31st December, 2030," reads the gazette.
  20. 1 2 Bull, Alister; Ndlovu, Ray (8 August 2024). "All About ZiG, Zimbabwe's Latest Shot at a Stable Currency". Bloomberg News . Retrieved 9 August 2024.
  21. Chingono, Nyasha (5 April 2024). "Zimbabwe launches gold-backed currency to replace battered local dollar". Reuters. Archived from the original on 5 April 2024. Retrieved 5 April 2024. The new currency - called Zimbabwe Gold (ZiG) - will circulate alongside foreign currencies, central bank governor John Mushayavanhu told a press conference in the capital Harare.
  22. Chingono, Nyasha; Savage, Rachel (8 April 2024). "Zimbabwe's new ZiG currency starts trading, credibility doubts linger". Reuters.
  23. "Why ZiG cannot immediately replace USD transactions". The Zimbabwe Mail. 12 April 2024. Archived from the original on 12 April 2024. Retrieved 12 April 2024.
  24. Ndlovu, Ray (12 April 2024). "Zimbabwe's Central Bank Chief Sees Deflation Risk From Strong ZiG". BNN Bloomberg. Archived from the original on 12 April 2024. Retrieved 12 April 2024.
  25. Muronzi, Chris (7 May 2024). "Zimbabwe's illegal forex dealers use WhatsApp to find clients, evade police". Al Jazeera.
  26. "Zimbabwe's gold-backed currency loses half its value: Why and what's next?". Al Jazeera. 24 October 2024. Archived from the original on 15 November 2024.
  27. "Zimbabwe's Tight Monetary Policy Stance Boosts ZiG, MPC Member says" . Bloomberg. 4 November 2024.
  28. "Zimbabwe's Gold-Backed Currency Strengthens Amid Central Bank's Tightened Monetary Policy". The Zimbabwe Mail. 4 November 2024. Archived from the original on 15 November 2024.
  29. "ZiG Begins Trading as Zimbabwe Banks Struggle With the Switch". Bloomberg.com. 2024-04-08. Retrieved 2024-04-08.
  30. "ZiG Posters" (PDF). Reserve Bank of Zimbabwe. Harare. 6 April 2024. Archived from the original (PDF) on 8 April 2024. Retrieved 8 April 2024.
  31. "RBZ to introduce ZiG 1 to 5 in coins – DailyNews". dailynews.co.zw. Retrieved 2024-04-27.
  32. Matambanadzo, Chris (2024-04-26). "ZiG Currency Revamp: RBZ Governor Announces Major Changes to Banknotes and Coins, Unveils New Denominations". iHarare News. Retrieved 2024-04-27.
  33. "Zimbabwe new currency". Chronicles. Retrieved 2024-04-06.
  34. "Zimbabwean dollar balances shrink in value amid ZiG currency launch". www.thezimbabwean.co. Retrieved 2024-04-06.
  35. "Press Statement" (PDF). Reserve Bank of Zimbabwe. 6 April 2024. Archived from the original (PDF) on 9 April 2024. Retrieved 9 April 2024.
  36. "RBZ satisfied with currency switch progress". The Herald. 8 April 2024. Archived from the original on 8 April 2024. Retrieved 8 April 2024.
  37. Taruvinga, Mary (5 April 2024). "Zimbabwe Launches New Gold-backed Currency". Barron's. Archived from the original on 5 April 2024. Retrieved 8 April 2024.
  38. Ndlovu, Ray (8 April 2024). "ZiG Debuts in Zimbabwe's Sixth Effort at a Revamped Currency". Bloomberg. Archived from the original on 9 April 2024. Retrieved 9 April 2024 via Yahoo! Finance.
  39. "Zimbabwe currency: Bank knocks 40% off value of gold-backed Zig". www.bbc.com. Retrieved 2024-10-08.
  40. Zimbabwe, New (2024-10-26). "Statistics agency notes soaring ZWG inflation rate, now pegged at 37.2%". NewZimbabwe.com. Retrieved 2024-10-29.
Preceded by:
Zimbabwean dollar
Reason: inflation
Ratio: 2498.7242 ZWL = 1 ZiG
Currency of Zimbabwe
8 April 2024
Note: Part of a multi-currency system
Succeeded by:
Current