Zimbabwe’s Tight Monetary Policy Stance Boosts ZiG, MPC Member Says
Zimbabwe’s gold-backed currency posted its first gain in more than two weeks, suggesting that tighter monetary policy is working the central bank said.
The ZiG, short for Zimbabwe Gold, strengthened 2.4% to 27.9986 per dollar, according to data posted Monday by the central bank, the first advance since Oct. 17. It remained at a discount of 35 to 40 per dollar on the unofficial market, a slight improvement from previous levels of 40 to 50 per dollar.
“The tightness in the market is on account of recent measures taken by the MPC,” said Persistence Gwanyanya, a member of the Reserve Bank of Zimbabwe’s monetary policy committee. “The natural expectation was for the ZiG to firm up and this is what we are seeing,” he said Monday in a telephone interview.
Sign up for the twice-weekly Next Africa newsletter for the latest business and economic news from the continent.
The central bank devalued the ZiG by 43% against the dollar on Sept. 27 and accompanied that move with a sharp hike in interest rates to 35% from 20%.
The ZiG is the southern African nation’s sixth attempt in 15 years at a stable local currency that would replace the US dollar as the main unit of exchange.
Finance Minister Mthuli Ncube may announce fresh steps in his budget later this month to lift demand, by requiring utilities, duties and local council payments to be made in ZiG, said Gwanyanya.
“Super-demand for ZiG is going to complement the monetary measures and result in permanent stability,” he said.
