Zimbabwe’s illegal forex traders resume operation after launch of new currency

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Zimbabwe’s illegal money changers are back on the streets after a brief hiatus following the launch of a new gold-backed currency in the country. The newly launched gold-backed currency is known as the Zimbabwe Gold (ZIG).

 

According to the East African, the new gold-backed currency is not yet physically available as the new notes and coins are still under production but the money changers are offering the currency electronically.

 

The money changers are offering slightly higher rates than the official exchange rate, which stands at $1 to 13.3437 ZiG according to ZB Financial Holdings,

 

The black market was however offering about 15 ZiG (buy rate) and around 20 ZiG (sell rate) to the US dollar, according to money changers.

 

A money changer conducting his business at the Westgate Shopping Mall northwest of Harare, Zimbabwe’s capital, said that he and his colleagues were always on the lookout for the police.

 

“Our selling rate is $1 to 20 or 21 ZiG depending on the amount transacted, and our buying rate is between 15 and 16 ZiG to the U.S. dollar, also depending on the amount transacted. Those disposing of higher amounts get more favorable rates,” he said.

The move to introduce Zimbabwe’s sixth currency since its independence was met with skepticism by the Zimbabwean people while some agreed it was a good move to salvage the inflation-battered Zimbabwean dollars and improve the economy of the country.

 

The ZiG started trading on April 8 at an exchange rate of 13.56 to the US dollar as the Reserve Bank of Zimbabwe (RBZ) sought to battle the high demand for US dollars as a store of value and instill lost confidence in the country’s new local currency.

 

The new gold-backed Zimbabwean currency was introduced as the Zimbabwe market was swaying into full dollarization as over 80% of transactions were conducted with the US dollar which continues to dominate the inflation-battered Zimbabwean dollars.

 

The Zimbabwean government has long issued warnings that it will deal with illegal money changers as it seeks to protect the new currency.

 

What to know

Zimbabwean economic experts remain optimistic about the success of the new gold-backed currency in the country’s economy. they cited the need to eschew individual interest and think only about using the new currency to fix the country’s economy.

Zimbabwe has changed its currency six times since its independence as it seeks to battle hyperinflation which has seriously depleted the value of its local currencies. The New gold-backed currency attempt is the latest trial.

 

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