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ZiG Continues To Decline After Major Devaluation

5 months agoMon, 30 Sep 2024 10:56:32 GMT

ZiG Continues To Decline After Major Devaluation

Zimbabwe’s gold-backed currency, the ZiG, which was devalued by 43% by the Reserve Bank of Zimbabwe (RBZ) on Friday, September 27, continued to decline against the United States dollar on Monday.

According to data on the central bank’s website, the ZiG was quoted at 24.88 per dollar, up from 24.39 on Friday.

On Friday, September 27, the RBZ set the official exchange rate at ZiG24.3 per US$1, a significant increase from ZiG14.1 per US$1.

Lyle Begbie, an economist at Oxford Economics, said that while recent adjustments are positive, they are unlikely to be sufficient.

He added that ongoing current account and fiscal deficits, coupled with limited access to external capital markets, will continue to exert significant pressure on the ZiG currency.

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RBZ Governor, John Mushayavanhu, in an interview with the state-controlled Sunday Mail newspaper, said that the devaluation was necessitated by an artificial spike in demand for foreign currency, combined with inflationary pressures. He said:

The underlying value of the structured currency (ZiG) is designed to mimic the movement in the prices of reserve assets backing it and the inflation differentials.
In this regard, as communicated in the April 2024 Monetary Policy Statement, the intervening exchange rate shall be determined by the inflation differential between ZiG and USD inflation rates and the movement in the price of the basket of precious minerals held as reserves.
In this regard, while the gold price has been firming, suggesting appreciation of the gold price-implied exchange rate, the country has witnessed increased inflationary pressures as evidenced by month-on-month inflation of 1,4 per cent in August 2024 and 5,8 per cent in September 2024, thus offsetting the firming gold price.
This has, therefore, underscored the need for a price discovery mechanism to align the exchange rate with the macroeconomic dynamics underpinning the structured currency.
The movement in the exchange rate is expected to play a critical shock-absorbing impact on the prevailing excess liquidity in the economy, which helps anchor inflation expectations and minimise the inflation differentials going forward.

The ZiG, which is supported by Zimbabwe’s gold and hard-currency reserves, was introduced in early April to replace the Zimbabwean dollar, which had plummeted by approximately 80% in value since the beginning of the year.

According to Mushayavanhu, the current reserves for the ZiG amount to US$380 million.

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45 Comments

Anonymous · 5 months ago

If ZIg is backed up by gold why can't we use it Kuma passports and fuel hapna zviripo. They are using the same strategy

Anonymous · 5 months ago

What can they say? Their pockets and accounts are filled with USD, their children study abroad where they pay fees using USD. Isu ana tumbura tigoche tisu tinongosvuuka ne nhamo ivo vachiguta.

Boss Gee😎 · 5 months ago

Ma1

comrade John 'Strong' ZiG · 5 months ago

verengai mupanzwisise apa,"The underlying value of the structured currency (ZiG) is designed to mimic the movement in the prices of reserve assets backing it and the inflation differentials.In this regard, as communicated in the April 2024 Monetary Policy Statement, the intervening exchange rate shall be determined by the inflation differential between ZiG and USD inflation rates and the movement in the price of the basket of precious minerals held as reserves.In this regard, while the gold price has been firming, suggesting appreciation of the gold price-implied exchange rate, the country has witnessed increased inflationary pressures as evidenced by month-on-month inflation of 1,4 per cent in August 2024 and 5,8 per cent in September 2024, thus offsetting the firming gold price.This has, therefore, underscored the need for a price discovery mechanism to align the exchange rate with the macroeconomic dynamics underpinning the structured currency.The movement in the exchange rate is expected to play a critical shock-absorbing impact on the prevailing excess liquidity in the economy, which helps anchor inflation expectations and minimise the inflation differentials going forward."

Anonymous · 5 months ago

saka va hafurirwa ZiG ravo mu account mavo vachaitasei zvazvadaiso?

gwavha · 5 months ago

zvoda mwari izvi

👀Pindula watch · 5 months ago

My view is if the currency is backed by gold, as the price of that mineral affirm, the content value of our gold appreciates meaning the whatever ammount of Gold ZiG bears surges, thereby we would see price reduction of certain things sold on ZiG price, even when they want to add up influx could be in coins for change, that can be done, only on net profits observed just like running books of Accounts in businesses there is a provision allocation for adjustments without tampering the circulatory value of currency, infact you inject fiscus to appreciate amidst folds appreciation, Ngava tiitireyi mushe ipapo, we know it's festive season code of ethics kuitira those going shopping ku Dubai China but please Kana President shunned the UN convention citing pressure what's stopping you directors and all to be home based wo, moita zve ZiG

Mudhibhisi · 5 months ago

The ZiG is NOT money but worthless toilet paper that is being forced only on us the povo.Vene vayo are not using it.They only use the US$.

gumedhe · 5 months ago

Zig **** emheni.Mushaya Zig chabuda hapana.

Garwe · 5 months ago

Zig adonha munu6i vakomana akuwara zvakaipisisa hameno akapona

Anonymous · 5 months ago

Zvakona n'anga murapwa achida ZWG dzichava n****ondo...

unknown · 5 months ago

It sure didn't shock absorb those who got paid their salary hours after you devalued the Zig. Without notice their salary couldn't buy what they had budgeted for their household.

Andrew mabvungo · 5 months ago

The big problem is transfer money if they want advice from me I'm here

shurushuru · 5 months ago

zanu pf must go

chamisa · 5 months ago

John Mushayavalue achatiuraya ne BP chete

Sir African · 5 months ago

As longer as ED is the president and Mushayavanhu is the Rbz gonernor the situation will get worse. Zambia had the very same situation as Zimbabwe in the 90s .In 2010 they had tame inflation and removed zeros from their currency. since then the zeros have not returned to their currency depite that Lunga tried to destroy the economy.

Anonymous · 5 months ago

It's now clear Zimbabwe cannot handle fiat currency (centrally controlled). Best to go for crptocurrency (de-centralised ). Zimbocash is already in place. We simply need to activate it.

madabula · 5 months ago

where is the gold kkkkk

Anonymous · 5 months ago

In Photoshop.

👀👀 · 5 months ago

with their Chinese friends

Anonymous · 5 months ago

🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣

👀👀 · 5 months ago

l can now see that the zig is backed by thieves ,vanoprinta 1 000 zig manji manji ,watch the space

ZimSketch · 5 months ago

whatever the explanation you give, no one will trust this regime. we said it from day one that there was neither gold nor any special metal backing the cotton psper

👀👀 · 5 months ago

@ZimSketch zvoorwadza ,bussines is not as usual, tuma small business twandaingoita kubva kare nditwo twandiri kungoita but mari haisi kubatika,l used to get some xtra cash nehuku dzema broilers but ndakasiyana nazvo ,chingwa l reduced matrays andaihodha,hwahwa l reduced the crates ,taa taakusheya boutique with friends ndakasiyana nazvo coz ma rentals airova pasi petsoka,so whatever chawurikuita zvinhu hazvisikubatana Chero ukabuda ziya cy,

👀👀 · 5 months ago

isu tatoo ne 4 months tisingatore mari yesekuru kubank,his days are numbered voenda havo pamudyandigere wenzungu dzavo idzodzo,& ma civil servant akawedzerwa pay futi zvinhu zvinobva zvakwira,mheno kuti xmas vanhu tinoidya here gore rino ,

jeksen · 5 months ago

pakaipa hapana kudya xmas nzara chete

Anonymous · 5 months ago

remove that ZANU PF

Anonymous · 5 months ago

Firstly, was the devaluation market driven or command driven? Ko ma swiping machines atowedzera mu street ari kubvepi uye ndiani muridzi wavo?

mtongi gava · 5 months ago

ma1 atanga ,chengetedzayi ma dhora munochowachowa mukabhaiza

chimuti · 5 months ago

chaora chinhu ichi

Antman · 5 months ago

So we can conclude that ZiG is no longer determined by Gold and a basket of commodities

drink more beer · 5 months ago

"The underlying value of the structured currency (ZiG) is designed to mimic the movement in the prices of reserve assets backing it and the inflation differentials." did you sit around a table with nick mangwana and george charamba drinking beer and then you all came up with this sentence?

hoy · 5 months ago

we in the struggle bus

ED · 5 months ago

Economic eDiots

mtt · 5 months ago

some lunatics are suggesting zimbabwe to drop usd! it will be a disaster

Anonymous · 5 months ago

They are paid to say that, so they will be protected from the disaster that follows. Same like when RTGS became the mono currency. They will swap it at 24 and it will devalue to 2400 before year end. The definition of insanity is doing the same thing over and over and expecting a different result. It is not politicians who are insane because this is part of the plan. Zimbabweans are the insane ones because we know what is coming and accept it anyway.

Anonymous · 5 months ago

That's why we can't bank our money .... will be looted