THE recently introduced local currency, Zimbabwe Gold (ZiG) is gaining acceptance in the market on the back of its performance in the foreign currency exchange boards while the transacting public is enjoying the convenience of using it for shopping after a smooth conversion process of bank balances.
By yesterday all major supermarkets in Bulawayo, banks, and other service providers like the Bulawayo City Council (BCC) and mobile phone service providers had already rebased their prices to the local currency.
An analysis of the foreign exchange value of the ZiG in its first week reveals that it has remained steady against major currencies.
According to figures provided by the Central Bank, when it was introduced the ZiG was trading at ZiG13.5616 to the United States dollar and 1,3733 to the South African rand. Last Tuesday it was trading at ZiG13,5348 to the dollar and ZiG1,3781 to the rand while by last Friday it had strengthened to ZiG 13,4178 to the dollar and ZiG1,3969 to the rand.
Local economist and National University of Science and Technology lecturer, Mr Stevenson Dlamini said the ZiG’s steady value in the first week of trade was a positive move noting that this will result in the market largely accepting and adopting the currency.
“The ZiG which was launched on 8 April has so far maintained a steady value, as it is still mainly being transacted on digital platforms. The Zimbabwe Stock Exchange also has managed to rebase and price its stocks in ZiG although trade is still low reflecting the market’s slow acclimatisation to the new currency.
“The trade in the informal sector is still low in terms of ZiG-denominated transactions as the market awaits the release of coins and notes into the economy. It is expected that as the awareness intensifies in the remaining days leading to 30 April, the market will improve its adoption levels with late adopters catching on the bandwagon,” said Mr Dlamini.
The RBZ Governor, Dr John Mushayavanhu, in his Monetary Policy Statement expressed confidence in the strength of the ZiG within the foreign currency exchange market, emphasising that the Central Bank will play a pivotal role in ensuring the currency is accepted.
In an interview with Zimpapers Television Network (ZTN) last Thursday, Dr Mushayavanhu emphasised the importance of the market having confidence in the Central Bank for the ZiG to be widely accepted.
He said gone are the days that there were different treatment of entities once a Monetary Policy was announced saying this largely led to the loss of confidence which subsequently could lead to the failure of the currency.
“There was previously no confidence in the RBZ but I must say, confidence cannot be legislated, we have to earn it as the Central Bank, and we have to walk the talk. I did say, when I was presenting the Monetary Policy that I want it to be the last Monetary Policy where I present, in future these statements must be two paragraphs where we are saying we are walking the talk.
“Only when people see, when things happen, as we stated them, when they begin to say that these people know what they are doing hence we can believe in them but beyond that, I cannot force people to have confidence in us, it will never happen, we have to walk the talk,” said Dr Mushayavanhu.
“The problem we have in our market is that when measures are announced, the next day, you see a queue of people requesting to be exempted, this won’t happen under my watch, we are all equal if we are going to surrender 25 percent of our forex, we are all going to surrender that.”
The RBZ Governor said the journey they were taking to ensure the viability of the ZiG was more of a back-to-basics journey where he aimed to create a natural demand for ZiG through the Government’s move of having 50 percent of tax returns paid in the local currency.
“The strategy is very simple, first of all, stabilise the currency, this is what we have done through the introduction of ZiG. The next step is to create demand for ZiG, and we have made the first step in getting the Government and Treasury to accept that 50 percent of QPD (income tax returns) payments will be made in ZiG, which on its own will create demand for ZiG.
“So we should significantly see a shift of people wanting to keep more of ZiG so that they can meet some of these obligations. I did say that we might run into a situation where we run out of ZiG come the June QPD and that means we are going to see an increase in the number of people wanting to use ZiG, right now we are at 85 percent (forex) is to 15 percent (ZiG), if we could end the year at 70 percent is to 30 percent, I will be happy,” said Dr Mushayavanhu.
He said the acceptance of the ZiG will happen on its own and once the people see that the currency has value they will accept it, noting that even if they don’t want to accept it they must pay QPD.
“I foresee June coming before June because people have to plan for their QPD, you don’t just wake up and saying you want this much so one has to plan. Treasury collects about US$300 million every quarter, and 50 percent of that will be US$150 million, currently, we have US$80 million worth of ZiG in circulation, so those who will be paying tax will have to buy ZiG from banks, then everyone will be chasing for ZiG and it will strengthen in terms of value,” said the RBZ governor.
On the acceptance of the ZiG in other countries, Dr Mushayavanhu said; “ZiG is a new currency, it’s convertible but it will take time for our neighbours to appreciate the fact that it is convertible and once they are convinced, you will start by seeing people in Musina (South Africa) wanting to take ZiG and the opposite happening for the rand coming this way, it’s something we won’t force on the market, it will happen on its own.”
The new currency has seen illegal money changers now relying on the RBZ rate in terms of their exchange rate.
Money changers interviewed said they were largely dealing in foreign currency cross rates.
“For ZiG our rate is controlled by the daily RBZ exchange rate, however, for us it is mainly the cross rates where we are making a little bit of profit although it is not much,” said a money changer.
