Devaluation chaos: Zimbabwe's new currency crisis deepens
In Zimbabwe, the new currency, Zimbabwe Gold (ZiG), introduced half a year ago, has experienced a significant devaluation of 43%, triggering a buying panic and store restrictions. Entrepreneurs warn of bankruptcy, and residents fear a repeat of the 2008 crisis.
Last week, following the 43% devaluation of Zimbabwe Gold (ZiG) introduced six months prior, a buying panic ensued across the country. In response, store owners implemented purchase limits of one item per person.
Purchase restrictions in Zimbabwe
As a result, starting Monday, most stores only allowed the purchase of one carton of milk, one loaf of bread, one bottle of oil, one package of rice, or one tin of coffee per customer.
A week ago, entrepreneurs warned that being forced to sell at the artificially inflated official ZiG exchange rate would lead to bankruptcy. On Wednesday, managers of the country’s largest supermarket chains, Pick n Pay and OK Supermarket, reported that the devaluation would likely force them to close their outlets.
Contradictory government assurances
The Zimpricecheck organization, which tracks the retail sector, highlighted that the abrupt shift goes against the government's recent claims regarding ZiG's stability and its alleged backing by gold.
The government and the Reserve Bank of Zimbabwe accuse illegal currency traders of worsening the ZiG exchange rate situation. However, the fight against them appears ineffective as police officers sent to patrol the streets sabotage their orders, aware their salaries are losing value and attempting to exchange them for more stable US dollars.
Retirees are also expressing dissatisfaction. When the new currency was introduced, its benefits were 13.9 ZiG per USD. With ZiG valued at 24.88 USD, their pensions are almost halved and arrive with a three-month delay.
Economist Lyle Begbie from Oxford Economics foresees that the currency devaluation may fall short of expectations as the economy remains strained by persistent inflationary pressures and restricted access to international capital markets.
Concerns of Zimbabwe residents
Zimbabweans fear a repeat of 2008, when the value of one USD reached 100 billion Zimbabwe dollars, and people had to use wheelbarrows to carry their wages. They now expect their salaries and pensions to be paid in US dollars.
