RBZ Boss Promises Relief for Frustrated Residents

By Thabisani Dube

It is no longer business as usual for money changers in the street as law enforcement agents continue to hunt them down as the government seeks to bring sanity to the economy.

For long, money changers have been left to run the streets with huge wards of local and foreign cash cajoling passers-by to buy and sell. So brazen had the money changers that they loitered in front of prominent supermarkets offering their swipe cards for “higher rate”.

Newly appointed Reserve Bank Governor, John Mushayavanhu came out guns blazing in a local radio programme by Star FM’s Linda Muriro on Thursday warning money changers and any who want to derail the country’s new currency –the gold backed ZIG that they will be dealt with severely.

ZIG was introduced on April 5, replacing the Zimbabwe dollar. The currency is fully backed by a basket of reserves, primarily gold, providing a stable foundation and enhancing its credibility for both local and international investors. ZIG comes in denominations of 1, 2, 5, 10, 20, 50, 100, and 200 notes and coins.

The exchange rate of ZIG is determined by dividing the official rate by the current gold price, making 1 ZIG equal to approximately US$0.06, or 13.6 to the USD. ZIG will co-circulate with other foreign currencies in the economy, and the multi-currency system is set to remain in place until 2030, as per the law.

However, the introduction of ZIG has been accompanied by exchange rate chaos, with unscrupulous individuals and businesses taking advantage of the system. Some businesses have failed to adhere to official exchange rates, and speculation and manipulation have further contributed to the instability.

In response to concerns raised by citizens in a phone in show, Governor Mushayavanhu said he fully understood the frustration and hardship caused by the parallel market exchange rates, particularly about ZIG. He said government was making efforts to reach every corner of Zimbabwe and involve local leaders in promoting the structured currency.

First of all, it is this currency backed by gold, precious metals, and foreign balance that we have, so it is going to be stable, said Governor Mushayavanhu. When we introduced ZIG notes and coins on the 30th (of April), this was received very enthusiastically by the public because the issue of change had become a very big problem, and now they can transact without being short-changed by their suppliers.

The Governor acknowledged that the exchange rate chaos was due to a combination of factors, including unscrupulous individuals and businesses exploiting the system, lack of adherence to official exchange rates by some businesses, speculation, and manipulation of the exchange rate.

We have surveyed supermarkets and traders, and they are all using the official rate. If there are parallel markets, they are done at a small scale with little profit, Governor Mushayavanhu said.

I also warned the public that if they are going to part with ZIG at a rate that is not correct, they
are shortchanging themselves because in June, when the government insists that people must pay their taxes 50 percent in ZIG and 50 percent in other currencies, ZIG is going to be a sought-after currency, and its value is going to appreciate, he added.

If I were the public out there, I would not part with my ZIG at any rate other than the ruling interbank rate that is in the market.

Regarding bond notes, Governor Mushayavanhu clarified, "Before the physical rollout of ZIG, there were challenges of people not accepting bond notes, but I must say that bond notes, even today, are still legal tender. You can go and change them at your bank, and you can also still use them.

To fight the speculators, Governor Mushayavanhu said they will freeze accounts and impose penalties on individuals and businesses found to be charging inflated exchange rates. He also urged residents to report any instances of exchange rate manipulation or non-compliance with official rates, emphasising the need to identify the people behind moneychangers.

We will subject the reserves we are holding in support of ZIG to audit, and the result of that audit will be made public, he said adding we already have checks and balances to ensure that whatever ZIG is in circulation will at all times be backed by reserves in the form of gold, other
precious metals, and US$ balances in place.

He urged people to play their part in helping the new currency survive by reporting any exchange rate irregularities to the authorities and support efforts to stabilize the exchange rate and promote economic stability.