Stop manipulating the currency: VP Chiwenga

VICE-President Dr Constantino Chiwenga yesterday appealed to all stakeholders to embrace the new Zimbabwe Gold (ZiG) currency to foster long-term market stability and anchor economic progress, warning that those bent on manipulating the exchange rate would not go unpunished.

He said measures to curb mineral leakages were being implemented, especially in the gold sub-sector and other precious and semi-precious stones, which are prone to smuggling and diversion to the informal market.

Following the introduction of the new ZiG currency, the Government has vowed to crush illegal money dealers with the police also recently cracking the whip on offenders. Last week police raids in Harare saw several illegal money changers being arrested and appearing in court.

Under the country’s laws, unlicensed foreign currency traders face up to 10 years in jail if convicted.

The new ZiG currency has since brought relief to shoppers due to its acceptance and purchasing power, reversing the volatile tide of the Zimbabwe dollar, which was weakened by inflation to unsustainable levels, prompting the shift to the new structured currency.

Backed mainly by gold and foreign currency reserves, the ZiG is expected to curtail inflation and restore durable macro-economic stability in the long-run, with the multi-currency regime set to stay in place until at least 2030.

Addressing local and foreign delegates at the Zimbabwe International Trade Fair (ZITF) International Business Conference in Bulawayo, VP Chiwenga said the stability of ZiG will boost investor confidence, stimulate growth and enhance the country’s competitiveness on the global marketplace.

“Noting the exchange rate induced instabilities that engulfed our economy, Government, through the Central Bank, has introduced a structured currency, the Zimbabwe Gold that shall at all times be anchored and fully backed by a composite basket of reserves comprising foreign currency and our God give precious minerals, predominately gold,” he said.

“This bold step symbolises Government’s unwavering commitment to the de-dollarisation programme premised on fiscal discipline, monetary prudence and economic revitalisation.

“The Zimbabwe Gold currency will serve as a reliable medium of exchange, a store of value, and a unit of account supporting our efforts to attract investment, stimulate growth, and enhance the country’s competitiveness in the global marketplace and ultimately, achievement of our developmental aspirations.”

VP Chiwenga said those who manipulate the new currency will face the full wrath of the law.

“The new currency will not be subject to exchange rate volatility or manipulation by speculators. We are saying speculation on the currency should cease, we know some are doing funny things in supermarkets, we will shut you down, so stop it,” he warned.

The Vice-President said the RBZ has also adopted a market-driven exchange rate system based on the concept of a willing-buyer willing-seller.

“This arrangement, supported by the Reserve Bank’s commitment to optimal money supply management, will go a long way in fostering exchange rate stability thus minimising exchange rate premiums of yesteryears,” he said,

To ensure the exchange rate remains stable, VP Chiwenga said Government has committed to use 50 percent of foreign currency proceeds from surrender requirements for strategic interventions in the foreign exchange interbank market, a development, which will also enhance the demand for the local currency.

To create ‘super’ demand for the ZiG, Government through the Treasury has also issued mandatory instruction to all public entities to pay 50 percent taxes through quarterly payment declarations (QPDs) in local currency.

The Monetary Policy Statement (MPS) has realigned interest rates, which used to be around 130 percent to 20 percent, a positive development that will go a long way in supporting credit to the productive sectors and boosting the country’s growth prospects.