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Zimbabwe Gold Faces Mixed Success Amid Forex Market Gains and Domestic Challenges

While Zimbabwe Gold (ZiG) has made strides on the foreign exchange market, its domestic challenges, including combating illegal trading and addressing coin shortages, continue to pose significant hurdles.


While Zimbabwe Gold (ZiG) has made strides on the foreign exchange market, its domestic challenges, including combating illegal trading and addressing coin shortages, continue to pose significant hurdles.
Credit: Foretoken Media 2024

HARARE, ZW – Zimbabwe's new gold-backed currency, Zimbabwe Gold (ZiG), has shown promising performance on the foreign exchange market but faces significant hurdles domestically. On June 4, the Zimbabwe Reserve Bank (ZRB) announced new measures to combat the black market and enhance the currency's usability within the country.


ZRB's Efforts Against Illegal Trading


In an effort to curb illegal foreign exchange trading, the ZRB made a public appeal through its X account, urging citizens to report illegal currency traders or businesses refusing to accept the new currency.


This appeal is part of an ongoing initiative to combat unauthorized trading, which often occurs at unofficial rates. According to Bloomberg, the ZiG has appreciated by 1.9% against the United States dollar since its physical introduction.


Zimbabwe Gold Mixed Success


The introduction of the ZiG has seen varied results. On May 15, Crime Watch Zimbabwe reported that South African authorities had arrested 224 illegal foreign exchange traders. Additionally, the RBZ Financial Intelligence Unit (FIU) froze 90 bank accounts and fined 40 individuals. The FIU continues to monitor banking activities to detect illegal ZiG transactions.


Impact of the Crackdown


The crackdown has led to a noticeable reduction in the number of illegal money changers operating in Harare's Central Business District (CBD) and surrounding areas. Despite these efforts, the ZRB's June 4 post indicates that the struggle against illegal trading persists.


A shortage of coins is another challenge facing the central bank. The ZRB emphasized its intent to increase the availability of small denominations, including ZiG1, ZiG2, ZiG5, and ZiG10. In a subsequent X post, the ZRB announced that ZiG cash would be accessible for withdrawal using debit cards from the government-owned Homelink financial services company in seven cities starting June 10, with plans for other financial institutions to follow suit.


The ZiG is Zimbabwe's sixth currency in 15 years. Initially launched as a digital currency tied to the price of gold, it transitioned to a physical form in April. Despite its backing by gold and foreign currency, the public's reception of the ZiG has been mixed.

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