The Reserve Bank of Zimbabwe (RBZ) has devalued the Zimbabwe Gold (Zig) by 44%, sending the currency plummeting from 13.98 to 24.3 against the US dollar.
The drastic move is aimed at addressing rising exchange rate volatility and inflationary pressures that have weighed on the economy since August.
According to RBZ Governor John Mushayavanhu, the decision was necessary due to renewed exchange rate pressures and rising inflation.
Despite the increased foreign currency inflows, the parallel market exchange rate continued to spiral out of control, with the gold-backed Zig trading at a premium of more than 100%.
The Monetary Policy Committee (MPC) has taken a number of measures to address these challenges, including raising the bank policy rate from 20% to 35%. The committee also increased the statutory reserve requirement for demand and time deposits to 30%.
The foreign exchange allowance has been reduced from US$10,000 to US$2,000 per individual.
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