Zimbabwe introduces new currency as depreciation and rising inflation stoke economic turmoil

Source: Jamaica Gleaner

HARARE, Zimbabwe (AP) -- Zimbabwe on Friday launched a new currency to replace its previous one that in recent months has been battered by depreciation, and in some instances rejection by the population.

Authorities hope the new measure will halt a currency crisis underlining the country's yearslong economic troubles.

Reserve Bank of Zimbabwe Governor John Mushayavanhu said the new currency will be called ZiG, and will be anchored on gold reserves and a basket of foreign currencies. It goes into effect on Monday.

The Zimbabwe dollar has come under sustained pressure in recent weeks, making it one of the world's worst performing currencies.

Since January, the Zimbabwe dollar lost over 70% of its value on the official market, and was plunging even further on the thriving but illegal black market.

Inflation increased from 26.5% in December last year to 34.8% this January before spiking to 55.3% in March, according to official figures.

Traders were increasingly rejecting lower denominations of the now scrapped currency, with many insisting on payment only in US dollars, which are also legal tender in the southern African country.

"We are doing what we are doing to ensure that our local currency does not die. We were already in a situation where almost 85% of the transactions are being conducted in US dollars," Mushayavanhu told reporters in the capital, Harare. People have three weeks to exchange the old notes with the new currency, he said.

Friday's announcement is the latest of a cocktail of currency measures undertaken by the Zimbabwean government since the initial spectacular collapse of the Zimbabwe dollar in 2009.

The period saw the country at one point issuing a 100 trillion Zimbabwe dollar banknote before the government was forced to temporarily scrap its currency and allow the US dollar to be used as legal tender.