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Zimbabwe’s New Currency, ZiG, Faces Rejection as Local Businesses Struggle for Foreign Currency

Zimbabwe's New Currency Surges Past Rand in Trading Strength, Will It Last?

Local businesses are facing challenges in accessing foreign currency from banks to finance the purchase of necessary inputs for production. This situation may lead to widespread rejection of the country’s new currency, the Zimbabwe Gold (ZiG).

Introduced on April 5, 2024, as a replacement for the Zimbabwe dollar, ZiG has encountered difficulties gaining acceptance, with most market participants preferring transactions in foreign currencies, particularly the US dollar.

Presently, ZiG cannot be utilized for purchasing fuel, an imported commodity requiring foreign currency for acquisition.

According to a report by Business Weekly, Denford Mutashu, president of the Confederation of Zimbabwe Retailers, stated during a recent meeting with manufacturers that producers are struggling to obtain the forex needed from banks to procure inputs.

Mutashu explained that some manufacturers are holding significant amounts of ZiG130 million but are unable to utilize it as raw material suppliers demand payment in USD.

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Concerns were also raised about the availability of forex in the interbank market, with banks informing businesses of a shortage. Lawrence Nyazema, president of the Bankers Association of Zimbabwe, acknowledged improvements in forex supply but noted that customers with ZiG loans are ineligible for forex allocation.

Also read: Government Commends National Foods for Reducing Reliance on Imports

Economist Farai Mutambanengwe, CEO of the Small and Medium Enterprises Association of Zimbabwe, highlighted confusion in the market regarding ZiG’s value and usability.

Additionally, some individuals queued for foreign exchange with their Zimbabwean dollars but were given Treasury Bills instead.

This uncertainty has led to reluctance in accepting ZiG due to its perceived lack of clear value.

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