RBZ Governor Explains ZiG Currency Devaluation Amid Rising Gold Prices
Written by Skyz Metro FM on September 30, 2024
Effort Moyo
30 September 2024
The Governor of the Reserve Bank of Zimbabwe (RBZ), Dr. John Mushayavanhu, has addressed the reasons behind the Zimbabwe Gold (ZiG) currency’s recent decline in value, despite rising global gold prices.
On Friday, the RBZ devalued the ZiG by 44%, lowering its value from 13.99 to 24.39 per US dollar.
Dr. Mushayavanhu explained that the ZiG’s value is influenced by the price of Zimbabwe’s reserve assets, including gold, and inflation differences between the ZiG and the US dollar.
Although gold prices have been increasing on the global market, Zimbabwe’s escalating inflation has diminished the potential gains. In September 2024, inflation surged to 5.8%, offsetting the benefits of higher gold prices.
He noted that in order to maintain the currency’s alignment with current economic realities, the exchange rate for ZiG needs to be adjusted periodically. This process, known as price discovery, helps reflect the underlying macroeconomic dynamics.
The adjustment also plays a vital role in absorbing excess liquidity in the economy, which in turn helps stabilize inflation expectations and minimize future inflation disparities.
Skyz Metro FM