Zimbabwe's central bank considers support for gold-backed currency

Zimbabwe’s central bank is planning to use its foreign currency reserves to stabilise the value of its gold-backed currency, the Zimbabwe Gold (ZIG), which has recently depreciated against the U.S. dollar.

The central bank governor, John Mushayavanhu, emphasised that the bank might intervene in the foreign exchange market to protect the ZIG from further volatility.

In addition to foreign currency reserves, which include gold, Mushayavanhu outlined a commitment to maintaining a strict monetary policy aimed at stabilising inflation and exchange rates.

“We will ensure that inflation and the exchange rate remain under control, and if necessary, we will use our reserves to prevent further market disruptions,” Mushayavanhu stated.

The ZIG was introduced with the intention of providing a more stable alternative to the Zimbabwean dollar by being backed by the country’s gold reserves.

However, it has faced challenges, including a decline in value.

In response, the central bank has vowed to take measures to ensure that the currency remains stable and maintains its value in international markets.

Since the ZIG's launch, Zimbabwe's foreign currency reserves have increased, further strengthening the bank’s ability to step in if the currency continues to face downward pressure.