Structured currency chance for confidence boost
The country is grappling with a currency that is fast losing its feet and analysts believe that the proposed structured currency to be introduced is a chance for monetary authorities to restore confidence in the banking sector.
Since January 1, 2024, the Zimbabwean dollar has depreciated by approximately 95 percent against the US dollar, with the exchange rate shifting from US$/6,192.40 to US$/14,093.66, on the interbank market.
In response, President Mnangagwa announced intentions to establish a more stable currency.
This sentiment was echoed by Finance, Economic Development and Investment Promotion Minister Mthuli Ncube.
He suggested that future monetary policy should control liquidity growth, which is closely linked to money supply growth and inflation, by tying the exchange rate to a hard asset like gold.
Authorities are also contemplating the implementation of a currency board to restore confidence in the local currency and preserve its value.
Asset management firm, Zimnat, commented on the issue and said; “It’s noteworthy that the monetary authorities have already introduced a gold-backed digital token, ZiG.
As per the Reserve Bank of Zimbabwe’s monetary policy dated September 26, 2023, ZiG has been a valid payment method for domestic transactions since October 5, 2023, in addition to its role as a value-preserving asset.”
“The structured currency has the potential to rebuild trust in the country’s monetary system. However, its adoption primarily hinges on the Reserve Bank of Zimbabwe’s unwavering commitment to transparency and policy consistency.
“The success of the structured currency is not just about its introduction, but also about how well the central bank can manage the transition, maintain economic stability and most importantly, regain the public’s trust in the nation’s currency system,” Zimnat added.
According to the asset management firm this is a significant task that requires careful planning, transparent communication and steadfast execution.-ebusinessweekly
