The Zimbabwe Gold (ZiG), heralded as a pivotal move to stabilize the volatile domestic currency, still falls short in its utility for purchasing fuel at service stations, according to a statement released by the Reserve Bank of Zimbabwe (RBZ).
Announced by central bank governor John Mushayavanhu on Friday, the new gold-backed ZiG commenced trading on Monday at an initial rate of 13.56 to US$1, replacing the much-criticized Real Time Gross Settlement Dollar (RTGS) and subsequently the Zimbabwe dollar. The latter had suffered severe depreciation due to rampant inflation, losing approximately 80% of its value this year alone and trading at 28,720 to US$1 before the transition.
Despite the launch, doubts loom over ZiG’s viability, with many skeptical about its ability to withstand sustained demand for the US dollar, which has become a preferred store of value among locals seeking to safeguard their savings against persistent inflation.
In response to inquiries, the RBZ stated on Tuesday that the current pricing structure for fuel, denominated in US dollars, would persist, although there was encouragement for the adoption of ZiG in the fuel sector.
“The current pricing mechanism in the fuel sector will remain in place until otherwise reviewed,” the central bank declared. “As Reserve Bank and government work towards wider use of ZiG, the fuel sector will be encouraged to accept ZiG for fuel purchases.”
In Zimbabwe, most fuel suppliers are authorized to trade in foreign currency, with the exception of the government-owned NOIC, which dispenses fuel in local currency. Given that fuel is predominantly imported, the availability of the US dollar remains critical for importers of petroleum products.
Past attempts to sell fuel in local currency have proven problematic, as merchants first needed to secure US dollars before importing the product. Consequently, the government shifted its policy stance to allow fuel trading exclusively in foreign currency, leading to a swift improvement in fuel availability at service stations.
