Zimbabwe turns to gold in effort to permanently ditch US dollar

Buckle up, because Zimbabwe’s going for a wild ride down Gold Lane, ditching the US dollar like it’s out of fashion. Under President Emmerson Mnangagwa’s regime, this southern African gem is shaking up its monetary system yet again. This time, they’re pulling a bold move by introducing a new gold-backed currency.

After a rollercoaster ride with its local dollar, Zimbabwe said, “Enough is enough,” and welcomed the ZiG with open arms. ZiG stands for Zimbabwe Gold, which sounds like something straight out of a treasure hunt, doesn’t it? 

John Mushayavanhu, the big boss at the central bank, spilled the beans, admitting that their love affair with the print button brought the Zimbabwe dollar to its knees. Imagine launching a currency and then watching it plummet faster than my interest in diets after spotting a chocolate cake.

Now, here comes the ZiG, swaggering in at an initial value of 13.56 to the US dollar. In the world of currencies, that’s like stepping into the ring with Mike Tyson on your debut match. But hey, Zimbabwe’s mantra now is “printing money is so last season.” They’re all about that solid, stable currency life, anchored in gold and precious metals. Think of it as Zimbabwe’s financial glow-up.

But here’s the kicker: Zimbabwe’s got about as much gold in its vaults as I have self-control at a buffet – not a lot. With just over a tonne of gold to its name and a bit more stashed overseas, critics are raising their eyebrows so high, they’re practically losing them in their hairlines. They’re questioning if this shiny new currency has the muscle to back up its swagger, especially in a country where “mattress banking” is more popular than Netflix and chill.

Now, onto the soap opera that is Zimbabwe’s monetary history. This isn’t their first rodeo with currency experiments. The country has flipped through currencies like a restless sleeper, with the ZiG being the latest pillow they’re trying to get comfortable with. 

Locals, however, seem to have given up on this ever-changing currency saga, with many like Benson Gandiwa, a grocery shop owner in Harare, sticking to the US dollar like it’s their lifeline.

Zimbabwe’s foreign exchange reserves are so thin, they make my patience look abundant. And in the grand scheme of things, having barely a month’s worth of import cover is like going on a road trip with the gas light on – risky business. Economists are dubbing this the “new currency every five years” trend, which doesn’t exactly scream stability.

On the bright side, President Mnangagwa is trying to play nice with international markets to get Zimbabwe back on the financial map. But let’s just say his efforts are meeting as much enthusiasm as a flat tire. And to sprinkle a bit more salt on the wound, the US has given Zimbabwe the cold shoulder in debt dialogue, thanks to some election shenanigans and a lack of love for Mnangagwa’s security force’s idea of a good time.

To top off this sundae of challenges, Zimbabwe’s now grappling with a severe drought that’s munching away at their harvests like a locust buffet. Mnangagwa’s crying out for over US$2 billion to handle this mess, which is like asking for a miracle on top of another miracle.

So, here we are, watching Zimbabwe take a leap of faith with the ZiG, hoping to land on a pot of gold rather than faceplant into economic quicksand.

By Jai Hamid for Cryptopolitan

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