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Zimbabwe’s new currency under strain, months after launch

Published

3 months ago

September 21, 2024

Five months after its launch, Zimbabwe’s new currency is under strain as grain imports deplete foreign reserves, threatening the government’s ambition to make it the only currency by 2026.

Zimbabwe Gold, backed by gold, is the country’s sixth stable currency effort in 15 years. Since its introduction in April at 13.6 ZiG per U.S. dollar, it has lost about 80% of its value on the illegal market.

On Thursday, the central bank said it had injected $64 million into the foreign exchange market this month to meet dollar demand.

“Over the past weeks, the Reserve Bank witnessed a build-up in pipeline demand for foreign currency at banks, reflecting transitory foreign currency supply and demand mismatches, thus, exerting undue pressure on the foreign exchange market,” central bank governor John Mushayavanhu said in a statement.

Despite a $50 million Reserve Bank infusion in July, he said the bank would continue to assist to stabilise the ZiG. Prosper Chitambara, an independent economist, said the devaluation showed villagers’ reluctance to accept the new currency.

By raising local currency levies, Gwanyanya suggested the government may boost ZiG use. “Government more than any other should show a preference for its currency and there is need for urgent intervention by injecting more foreign currency on the market,” stated.

“The ZiG has been getting weaker so it does not make business sense to transact with it. I do not have faith in the ZiG. We have been here before with the Zimdollar,” Maynard Maketo, a street hawker selling candy and recharge cards said.

Pricecheck, an exchange rate tracking website, reports that the ZiG trades between 20 and 26 ZiG to $1 on the underground market and 13.9 on the official exchange.

In downtown Harare, grocery seller Carol Munjoma only accepts U.S. money.

“Where I buy these groceries, they do not accept ZiG. So to protect my business I charge in U.S dollars. The ZiG would have to be stable to be accepted here,” the mother of two said.

Mushayavanhu, the central bank chief, stated to Reuters in July that officials will maintain their commitments to develop trust in the new currency, which Gwanyanya also shared.

“It is too early to consider that this may be the death of the ZiG,” said Gwanyanya.

Related Topics:Currency Featured Zimbabwe

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Moroccan annual inflation rises to 0.8% in November

Published

15 hours ago

December 21, 2024

Ifeoluwa Dada

Morocco’s statistics office has confirmed that the country’s annual inflation rate, as determined by the consumer price index, increased from 0.7% in October to 0.8% in November.

Monthly, consumer prices decreased by 0.2% from October.

The primary driver of inflation, food costs, grew by 0.8% compared to the previous year, while non-food inflation climbed by 0.7%. Core inflation, which does not include more erratic items like food, increased 2.6% annually and 0.2% monthly.

According to the central bank, inflation is expected to average 1% this year, down from 6.1% last year.

Despite the Al-Haouz earthquake, a spike in inflation, and worldwide economic challenges, Morocco’s GDP grew by 3.4% in 2023.

A recovery in tourism, robust industrial exports, and rising private consumption—all bolstered by prudent macroeconomic policies—were the main drivers of growth.

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Nigeria’s $42bn foreign reserves enough for 9 months’ imports— Central Bank

Published

2 days ago

December 20, 2024

Ifeoluwa Dada

According to Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), the nation’s $42.01 billion in foreign reserves can cover imports of goods and services for almost nine months.

Cardoso promised Nigerians improved economic fortunes in 2025 while addressing the Senate Committee on Banking, Insurance, and Other Financial Institutions yesterday in Abuja at the presentation of the performance index report.

Cardoso stated: “External Reserves rose from $ 38.35 billion it was on September 30, 2024, to $ 42.01 billion as of December 12, 2024”.

He clarified that third-party receipts in Q3 2024 and revenues from taxes connected to crude oil were the main drivers of the rise in foreign reserves during the specified time.

“We saw remarkable improvements in our trade balance and maintained a current account surplus,” he added.

“Our external reserves level can finance over 9.09 months of import of goods and services or 13.91 months only, higher than the international benchmark of 3.0 months and a robust buffer against shocks”.

On cash shortage, the CBN boss reiterated the N150 million fine against any branch of banks caught illegally distributing new Naira notes to currency hawkers and unscrupulous elements and said the Nigerian economy will improve in 2025 through policies and measures.

He predicted a stronger economic future: “Despite our economy’s challenges, there are clear reasons for optimism.

“The gradual stabilization of the forex market, ongoing banking sector recapitalization, and positive growth trends in key sectors, especially the services sector, indicate a path toward recovery and stability.”