RBZ holds interest rates steady as ZiG cash makes its debut

The Reserve Bank of Zimbabwe has kept its benchmark interest rate unchanged at its first policy meeting since unveiling the gold-backed currency, the ZiG.

Governor John Mushayavanhu said in a statement that the monetary policy committee had held the rate at 20% after receiving positive market reaction to the new currency.

According to Mushayavanhu, the MPC expects currency reforms to help provide “stability, certainty and predictability in the exchange rate and inflation”.

The MPC also set the interest rate corridor at between 11% to 25%, Mushayavanhu said.

Zimbabwe introduced ZiG, short for Zimbabwe Gold on 5 April. The currency is backed by 2.5 tons of gold and $100 million in foreign currency reserves held by the central bank. On the same day, the central bank reset interest rates from 130%, a world record, to 20%.  

The ZiG notes start circulating Tuesday and have been distributed to banks, Mushayavanhu said separately. 

“There is that need for Zimbabweans to use ZiG. I implore the nation to focus on a currency preservation system to facilitate ease and convenience to Zimbabwe. It is all about confidence and as the central bank, we are guaranteeing confidence in the economy,” said Mushayavanhu.