(Bloomberg) — Zimbabwe’s ruling party passed a resolution to adopt the bullion-backed ZiG currency as the country’s sole legal tender and phase out the use of US dollars.
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The government is ordered to “expedite efforts to dedollarize the economy and promote the use of the ZiG as the country’s sole currency,” according to the resolution agreed at the ruling Zimbabwe African National Union-Patriotic Front annual conference at the weekend. No timeline was given for the change.
The ZiG, short for Zimbabwe Gold, is the southern African nation’s sixth attempt in 15 years at replacing its main transacting currency — the dollar. Under the nation’s current laws, the US currency will remain legal tender until 2030. President Emmerson Mnangagwa has previously suggested this timeline may be brought forward.
Adopted in April, the ZiG has faced setbacks including a 43% devaluation last month and calls for it to be abandoned. Since the September devaluation, “public confidence in the ZiG has weakened and incentivised further dollarization of the economy,” Oxford Economics wrote in a recent note.
The International Monetary Fund also cautioned last week that the ZiG alone is unable to fix the nation’s deeper economic issues. Those include high inflation and the lack of public confidence in fiscal and monetary authorities.
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Zanu-PF, which has ruled Zimbabwe since it gained independence in 1980, often uses its resolutions to anchor government policies. It instructed the government to take “robust measures to strengthen the purchasing power of the ZiG and entrench its usage,” according to a party resolution.
The ZiG traded at 28.37 per dollar on the official market on Monday and was quoted at rates between 40 and 50 per dollar on the parallel market, according to ZimPriceCheck.com, a website that monitors both exchange rates.
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