New banknotes printed, ready . . . Central bank promises enough cash

Debra Matabvu

THE Reserve Bank of Zimbabwe (RBZ) has completed printing and minting the new Zimbabwe Gold (ZiG) banknotes and coins that are set to be introduced into the market on Tuesday next week.

In an exclusive interview with The Sunday Mail, RBZ Governor Dr John Mushayavanhu said the new currency denominations — backed by a combination of gold, precious minerals and foreign currency reserves — were produced locally.

 

He said the central bank had produced enough notes and coins “to satisfy the needs of the market”.

The delay in rolling out physical notes and coins was meant to allow for extensive public education campaigns designed to ensure that stakeholders understand and embrace the new currency.

ZiG notes will be drip-fed into the market in denominations ranging from ZiG1 to ZiG200.

The coins will come in the form of half ZiG and quarter ZiG.

“The new currency has already been introduced,” said Dr Mushayavanhu.

“It was introduced on April 5 when we announced the Monetary Policy Statement.

“On that day, we converted all our Zimbabwe dollar balances into ZiG.

“So, if you go to your bank today, you will find that your balance has been converted to ZiG.

“The next stage is now to introduce the notes and coins.

“And these are the ones that are going to be introduced on April 30. The money has already been printed. It is there.”

The central bank, said Dr Mushayavanhu, was presently conducting extensive educational campaigns to raise awareness on features of the new currency.

“But before issuing it to the public, we have to make sure that we have undertaken an extensive education campaign so that people understand the features of the new currency,” he added.

“We want to avoid a situation where some unscrupulous people can cheat people by giving them fake notes and coins.

“So, this process is ongoing.”

The bank, he said, was working closely with the Ministry of Information, Publicity and Broadcasting Services to publicise the new currency in all parts of the country.

Dr Mushayavanhu said ZiG was a stable currency that has been gaining value progressively since its introduction.

Presently, an ounce of gold is trading at US$2 400 on the London Bullion Market Association, with prices of the precious metal expected to continue on an upward trajectory.

“ZiG is a stable currency. If you have been watching developments of late, since we introduced ZiG on April 5, it has been trading now for over a week,” said Dr Mushayavanhu.

“And every day it has been strengthening.

“It is mainly influenced by the movements in the price of gold.

“So, if you have a currency that is anchored in a valuable commodity like gold, definitely it is bound to strengthen and be stable.”

He also said measures pronounced in the Monetary Policy Statement will ensure inflation remains under control.

Complementary measures by Treasury, such as demanding payment of half of corporate taxes in the local unit, were set to drive up demand for ZiG.

“The measures that we put in the Monetary Policy Statement are meant to control inflation. If you are going to have a currency that is stable, it means that inflation will be contained,” he added.

“If the exchange rate for ZiG to the US dollar is strengthening, it actually means that prices should go down, instead of going up. Our fear is actually not inflation, but rather, deflation.”

Dr Keen Mhlanga, a Harare-based investment adviser, told The Sunday Mail that backing the local currency using gold distinguished ZiG from other currencies.

“The introduction of a new currency, known as Zimbabwe Gold, has a mark on the economy.

“The value of the money is connected to the price of gold, which distinguishes it from previous currencies,” he said.

“Pegging currency against gold implies that when the price rises, so will the value of the currency.

“Also, mechanisms put in place to audit the money issued against reserves are basic drivers of currency value.”

The new currency replaced the Zimbabwe dollar, which was rapidly depreciating against major currencies since the beginning of the year.

The RBZ has in its reserves US$100 million in foreign currency, as well as 2,5 tonnes of gold valued at US$185 million.