A RESERVE Bank of Zimbabwe (RBZ) monetary policy committee member has admitted that confidence in the six-month-old Zimbabwe Gold (ZiG) currency has bottomed to a historic low.
Zimbabwe introduced the ZiG in April this year pegged at ZiG13,50 to one United States dollar.
The ZiG, one of the many experiments aimed at reintroducing a local currency, has been on a free-fall with traders and retailers now rejecting it fearing losses reminiscent of 2008 when the country dumped the Zimdollar.
This comes despite the currency firming against the dollar, trading at ZiG25,4834 per dollar on the interbank market yesterday from ZiG28,6829 on November 1.
It is currently trading at around ZiG43 to one United States dollar on the parallel market.
RBZ Monetary policy committee member, Persistence Gwanyanya, acknowledged that the ZiG has suffered lack of trust from the transacting public.
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“In our case where confidence has bottomed to historic low, on account of hyperinflation experiences insisting that the same confidence will drive stability is preposterous,” Gwanyanya said during the Insurance Institute of Zimbabwe annual Conference in Victoria Falls.
Some service providers are now demanding to be paid for their products exclusively in US dollars to hedge against potential losses.
Government has insisted that there is no going back on de-dollarisation.
Gwanyanya, however, said there was a need to boost confidence in the ZiG to ensure it is not demonetised like previous local currencies.
He said this could be done by ensuring that government prices its services exclusively in the local currency.
"To deal with the rejection effect, there is a need to underwrite the ZiG through supper demand,” he said.
“Robust use case, established around wider options for the ZiG is necessary. Government is the best to drive the demand for ZiG through taxes, duties, statutory and user fees.
“We expect Treasury to increasingly pivot towards ZiG the 2025 budget. Increased appetite for ZiG by the government is seen as a confidence boosting measure, but it also means the government has to increasingly rely on the surrender funds/interbank market for its forex requirements.”
Finance minister Mthuli Ncube has said the 2025 budget will be anchored on boosting the ZiG.