Zimbabwe

Zimbabwe sought to assure citizens that its gold-backed currency would not suffer another steep devaluation and steps were being taken to assure its defence, Bloomberg News reported. “It was a once-off,” Reserve Bank of Zimbabwe Governor John Mushayavanhu told the state-owned Zimbabwe Broadcasting Corporation in an interview posted on X. “We expect things to stabilize going forward and should start to see prices fall.” The ZiG — short for Zimbabwe Gold – was devalued by 43% on Sept. 27 to 24.4 per dollar after a wide gap emerged between the official and unofficial exchange rate.

Zimbabwe’s government has hired financial and legal advisers to help it navigate potential talks with international creditors over the $21 billion it owes, Bloomberg News reported. Paris-based boutique firm GSA & Co. SAS, founded by a former Rothschild & Co. banker, and law firm Kepler Karst, which specializes in debt restructuring and insolvency, signed engagement letters to provide Zimbabwe with advice on debt management. The southern African country has been locked out of international debt markets since 1999 after a default, and its interest payments have ballooned.

Zimbabwe’s creditors may be willing to consider a debt-for-climate swap with the nation as part of a restructure of its $21 billion in arrears, Bloomberg News reported. Interactions with the nation’s development partners indicate it is “an option that they are willing to consider,” Raul Fernandez, a United Nations Development Program project manager for climate development frameworks, said at a summit Monday hosted by the country’s Treasury in the resort city of Victoria Falls. “They need to see some action from the government, this commitment to structural reforms,” he said.

Zimbabwe’s banks support adopting the ZiG as the nation’s sole currency before the current target date of 2030, provided the economic stability which the bullion-backed unit has delivered is maintained, Bloomberg News reported. Bankers Association of Zimbabwe President Lawrence Nyazema said the availability of the ZiG — which stands for Zimbabwe Gold — will improve as the nation boosts its foreign currency and bullion holdings. “We committed to coming up with a roadmap which would lead us to having a mono-currency by 2030,” Nyazema said in an interview.

Zimbabwe will seek full convertibility of its new currency, the ZiG, as a way to further support the unit and protect it from collapse, according to Mthuli Ncube, the Finance Minister, Bloomberg News reported. The ZiG’s predecessor, the Zimbabwe dollar, couldn’t be exchanged for other currencies, or traded outside the country. The international community has “reacted positively” to the new unit since its launch last month, and asked Zimbabwean authorities to ensure it’s kept stable, according to Ncube.

Zimbabwe, in its latest bid to end the serial slide of the local dollar, has replaced it with a new unit called the ZiG backed by a basket of foreign currency and gold, Bloomberg News reported. Central Bank Governor John Mushayavanhu told a press conference in Harare, the capital, on Friday, that the ZiG — short for Zimbabwe Gold — would be launched on April 8 at an introductory level of 13.56 per dollar and a new interest rate set at 20%. That compares with the 130% on the old unit, which was the highest central bank rate in the world.

Zimbabwe gave up its unenviable position of having the world’s highest interest rate to Argentina, after slashing borrowing costs to help boost economic growth, Bloomberg News reported. The monetary policy committee cut the benchmark interest rate to 130% from 150%, which lags Argentina’s 133%. The MPC acted because of “emerging global risks and the need to keep exchange rate and inflation expectations anchored to support economic growth,” Governor John Mangudya said in an emailed statement on Tuesday.

Call it a quasi-central bank digital currency or a government-sponsored stable coin — Zimbabwe’s new gold-backed virtual token is the country’s latest attempt to end decades of chaos, according to a Bloomberg News commentary. The digital coin went live earlier this month in a bid to divert demand for US dollars in the landlocked African nation, where inflation has soared and the local Zimbabwean dollar is struggling. The idea, at least according to officials, is that the new token will give people and businesses an easy way to use the ultra-safe value of gold as a currency benchmark.

Zimbabwe plans to keep its local currency as legal tender, even as the US dollar is now the unit of choice for most transactions in the economy, Bloomberg News reported. The extensive use of US dollars doesn’t concern authorities, who instead see it as a way to access foreign currency, according to Mthuli Ncube, the southern African nation’s finance minister. The country is ineligible to access lines of credit from multilateral financial institutions because it owes more $14 billion.

Zimbabwe will hold talks with the US, UK and the European Union to end an impasse over $14 billion owed to external creditors as it seeks to shore up funding for development programs, Bloomberg News reported. The southern African nation has been locked out of international capital markets since defaulting on payments to the World Bank and other multilateral lenders more than two decades ago.