ZiG will fail if it won’t buy fuel: Zimbabweans unconvinced about new currency
Zimbabweans remain unconvinced about the success of the newly introduced currency (ZiG) after the Reserve Bank of Zimbabwe said they can not guarantee that it could be used to buy fuel from service stations.
John Mushayavanhu, the governor of the central bank, unveiled the new gold-backed ZiG on Friday.
It began trading at 13.56 to US$1 on Monday, the customary launch day.
The highly disliked Real Time Gross Settlement Dollar (RTGS) and the Zimbabwe dollar were replaced by the new currency. The contentious exchange mechanism had been trading at 28,720 to US$1 prior to the shift, but it had been severely damaged by fierce inflation, which caused it to lose over 80% of its value this year alone.
Also Read: Toll fees to be paid in ZiG: ZINARA
However, doubts have been raised about ZiG, with many speculating that its value would soon be destroyed by the US dollar’s persistent demand, which is now widely utilized by locals as a store of value to protect funds from rising inflation.
In a statement, RBZ did not help any matters when it said Tuesday the current US dollar-denominated fuel pricing regime shall remain in place despite locals being encouraged to embrace the new currency.
“The current pricing mechanism in the fuel sector will remain in place until otherwise reviewed,” said the apex bank.
“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, fuel suppliers were allowed to sell in foreign currency with only government company NOIC dispensing the valuable liquid in local currency.
Fuel is procured from outside the country.
The US dollar remains crucial to importers of the petroleum product.
Past selling of the product in local currency have backfired with merchants first having to source for US dollars before importing the liquid.
Government was forced to change its policy stance by allowing fuel trading in foreign currency and that is when fuel availability from service stations improved almost immediately.
