Zimbabwe’s central bank recently devalued its gold-backed currency by 40% against the US dollar, signaling a struggle to stabilize the country’s fragile economy. The Reserve Bank of Zimbabwe (RBZ) made the decision to slash the local exchange rate to 24 Zig to $1, in response to a surge in demand for the US dollar and threats of store closures from large retailers.
The Zig, introduced six months ago as Zimbabwe’s sixth currency in 25 years, has faced challenges maintaining its value on the black market where US dollars are predominantly used. The RBZ stated that the devaluation was necessary to address exchange rate risks, inflation expectations, and price stability in the short term.
Despite efforts to promote the use of the Zig, many Zimbabweans continue to rely on the US dollar due to a lack of viable alternatives. The central bank’s credibility has also been tarnished by past incidents, such as the hyperinflation crisis in 2008.
This latest devaluation highlights the ongoing economic struggles in Zimbabwe and the challenges of establishing a stable and trusted currency system.
Source link