Decline in Gold Prices Leads to Weakening of Zimbabwe's ZiG Currency

Zimbabwe’s new gold-backed currency, the ZiG, experienced its first decline since its introduction this April, slipping nearly 1% to trade at 13.38 against the dollar on Thursday. This weakening aligns with recent drops in gold prices, which have seen a downturn over the past three days. The ZiG, an acronym for Zimbabwe Gold, is supported by a mix of precious metals, including approximately 2.5 tons of gold, and $100 million in foreign currency reserves maintained by the central bank. The currency debuted at 13.56 per dollar, replacing the significantly devalued Zimbabwean dollar, which had plummeted about 80% against the US dollar since the beginning of the year. During a business conference in Bulawayo, Zimbabwe’s Vice President Constantino Chiwenga emphasized the ZiG’s role in transitioning away from the US dollar, which is used in roughly 80% of transactions. The government plans to phase out the US dollar as legal tender by 2030.