RBZ devalues ZiG by 42,55pc against the Dollar, despite US$64 million intervention

The Reserve Bank of Zimbabwe (RBZ) has devalued the Zimbabwe Gold (ZiG) by 42,55 percent against the US dollar, following weeks of rising black market rates and market pressure.

In a correspondent issued to banks and bureau de change on Friday and seen by the Business Weekly, the RBZ announced the new exchange rate of ZiG 24.3902 per US dollar.

This marks the first official devaluation of the ZiG since its introduction.

Prior to the adjustment, the currency traded between ZiG 13 and 14 per US dollar. Despite the devaluation, the new official rate is still 23,78 percent lower than the black market rate, which has surged to around ZiG 32 per dollar, with some traders demanding even higher premiums based on demand and supply dynamics.

The devaluation follows RBZ’s recent efforts to stabilize the currency. In September 2024, the central bank injected US$64 million into the interbank market in a bid to curb further depreciation.

Governor Dr John Mushayavanhu confirmed that US$24 million was injected in the first two weeks of September, followed by an additional US$40 million on September 19. Despite these efforts, the parallel market continues to exert pressure, with rates far exceeding the official exchange rate.

“Pursuant to smoothening the supply/demand mismatches in August/September 2024, the Reserve Bank has during the first two weeks of September 2024 injected US$24 million into the interbank foreign exchange market,” said Dr. Mushayavanhu.

He further added that by mid-September, the bank sold an additional US$40 million into the market, resulting in a total injection of US$64 million for the month.

This currency instability highlights the challenges the RBZ faces as it attempts to manage growing demand for foreign currency while keeping the official exchange rate in line with market realities.-ebsinessweekl