Zimbabwe’s ZiG Drops Over 40% After Exchange Rate Adjustments

Zimbabwe’s new currency, the ZiG, fell by over 40 per cent after the central bank adjusted the official exchange rate to match the parallel market. The central bank’s website showed the ZiG mid-rate at 24.3902 per dollar on Friday, up from 13.9987 on Thursday, marking a 42.6 per cent drop.

The move aimed to close the gap between official and parallel market rates. Governor John Mushayavanhu blamed “foreign currency supply-and-demand mismatches” and promised a more market-driven approach.

The Reserve Bank of Zimbabwe stated that its Monetary Policy Committee (MPC) met on Friday and agreed to allow more exchange rate flexibility. The MPC also raised the bank’s policy rate from 20 to 35 per cent, effective immediately. The ZiG, launched in April to replace the Zimbabwean dollar, has faced stability issues.

The central bank believes its recent measures will help address exchange rate risks, control inflation expectations, and stabilise prices in the short term. However, according to Reuters, independent economist Hapi Zengeni pointed out that it’s unclear if the central bank will let the ZiG float freely or continue to control the rate after the devaluation.

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