KEY POINTS
- Zimbabwe’s gold backed currency gains for first time in 2-weeks.
- Monetary policy measures are tightening the ZiG with a barrage of interest rate hikes.
- He will announce extra steps, such as mandatory payments in ZiG, to generate demand.
Zimbabwe’s ZiG, a gold backed currency, recorded its first gain in over two weeks as the country’s tighter monetary policies.
The ZiG gained 2.4 percent to 27.9986 per dollar, its first advance since October 17, according to data released Monday by the Reserve Bank of Zimbabwe.
Tight monetary measures of the central bank bares result
The currency’s improvement was as a result of recent measures put in place by the central bank, said Persistence Gwanyanya, a member of the Monetary Policy Committee (MPC).
He noted in a phone interview, “The MPC’s recent measures tightened the market to bolster the ZiG, which now shows signs of firming up.”
In September the Reserve Bank devalued the ZiG by 43 percent and raised interest rates sharply from 20 percent to 35 percent in its bid to stabilize the currency.
Demand boost of the ZiG
However, the ZiG Zimbabwe’s sixth attempt at having a stable local currency in 15 years still trades at a discount on the unofficial market, though the gap’s narrowed slightly.
In the budget to come, Finance Minister Mthuli Ncube will reveal further steps to boost demand for the ZiG. Including requiring utility bills and local taxes to be payable in the gold-backed currency.
According to New Zimbabwe, “Super-demand for ZiG will be superimposed onto a monetary policy and will lead to permanent stability,” he stressed.
