ZIMSPHERE
HARARE – The Reserve Bank of Zimbabwe (RBZ) has confirmed that the newly introduced Zimbabwe Gold (ZiG) cannot be used to purchase fuel at local service stations. This comes despite the currency being hailed as a solution to stabilize the country's volatile domestic currency.
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| Zimbabwe's new gold-backed ZiG currency |
The gold-backed ZiG, announced last Friday by Central Bank Governor John Mushayavanhu, was launched on Monday with an initial rate of 13.56 to US$1. It replaced the Real Time Gross Settlement Dollar (RTGS) and the Zimbabwe dollar, both of which had been severely devalued by rampant inflation – which had lost about 80% in value this year alone and was trading at 28,720 to US$1 prior to the change.
However, the ZiG has been met with skepticism, with many predicting its value will soon be eroded due to the continued demand for the US dollar.
The US dollar is commonly used by locals as a store of value to protect savings from persistent inflation.
In a statement released on Tuesday, the RBZ announced that the current US dollar-denominated fuel pricing regime will remain in place, despite encouragement for locals to adopt the new currency.
"The current pricing mechanism in the fuel sector will remain in place until otherwise reviewed," said the apex bank.
"As the Reserve Bank and government work towards wider use of ZiG, the fuel sector will be encouraged to accept ZiG for fuel purchases."
In Zimbabwe, fuel suppliers have been permitted to sell in foreign currency, with only the government company NOIC dispensing fuel in the local currency.
Fuel is imported from abroad, making the US dollar crucial for importers of the product.
Previous attempts to sell the product in local currency have failed, with merchants needing to source US dollars before importing fuel.
The government was forced to change its policy stance by allowing fuel trading in foreign currency, which led to an immediate improvement in fuel availability at service stations.
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