Zimbabwe's new currency — Zimbabwe Gold (ZiG) — will become the sole means of payment in the country over the next two years, displacing the US dollar from the national monetary system, Zimbabwean President Emmerson Mnangagwa said at the commissioning of the Mutare Teachers College Fruit Juice and Water Processing Plant on Thursday.
“In two years’ time — in fact, two years is too far — we will get to the point where I see that the ZiG is available in every part of the country,” he stated. “We are getting there. When you go to the shops carrying US dollars, they will refuse to accept them.”
ZiG is backed by 100 tonnes of gold and the government's foreign exchange reserves of $100 million. At launch, the ZiG exchange rate was set at 13.56 of Zimbabwean gold per US dollar. Since then, however, the ZiG has depreciated by 1.5% against the US dollar. At the start of trading on July 5, $1 was exchanged for 13.76 ZiG on the Zimbabwean financial market.
Interestingly, in the summer of 2019, the Zimbabwean government banned the circulation of US dollars in the country. However, nine months later, this ban was lifted.
In mid-May, Western media reported, citing a government notice, that the country will impose penalties on businesses that don’t use the official new currency rate to support ZiG.