Less than a week after its launch, the Zimbabwe Gold (ZiG) has gained against the United States Dollar by 0.2%, making it one of the strongest currencies in Southern Africa.
The ZiG currency is expected to address the country’s currency woes, which have persisted for the past 25 years.
Last week, the country’s central bank introduced the new gold-backed currency in an attempt to tame price gains that reached a seven-month high of 55% in March.
This is the country’s sixth attempt at creating a new currency since 2008. The Zimbabwe dollar — the currency most recently used by the country — has depreciated by 80% this year alone.
There has been so little confidence in Zimbabwe’s local currency that about 80% of the country’s population transacts in the US dollar.
On Thursday, Zimbabwe’s central bank governor, John Mushayavanhu, said the country has real gold and mineral assets to back up the new ZiG currency. Mushayavanhu mentioned that Zimbabwe’s central bank holds 2.1 tons of gold and other assets, including diamonds, equivalent to 0.4 tons of gold.
The ZiG started trading on Monday at an exchange rate of 13.56 to the dollar, set by the central bank. The gain in the ZiG was a result of the increase in gold prices.