Zimbabwe's Gold-Backed Currency Follows New Trend Of Kenyan Shilling, Gains Against US Dollar

• The Zimbabwe Gold (ZiG) has shown a positive performance in the first trading week, appreciating by 1.1% against the US dollar
• ZiG was introduced to replace the old Zimbabwean dollar, which had been severely impacted by inflation
• Reserve Bank of Zimbabwe governor John Mushayavanhu launched the currency on April 5, marking a significant step towards resolving the country's currency crisis

Elijah Ntongai, a journalist at TUKO.co.ke, has more than three years of financial, business, and technology research expertise, providing insights into Kenyan and global trends.

The Zimbabwe Gold (ZiG) has had a promising start in its first week of trading, with a 1.1% appreciation against the United States dollar.

The surge coincides with the strong increase in gold prices, fueled by investor demand for safe-haven assets due to escalating tensions in the Middle East, as reported by Xinhua.

Why Zimbabwe introduced a new currency

The ZiG was introduced as a replacement for the old Zimbabwean dollar, which had been severely affected by inflation.

It began trading on Monday after being launched by Reserve Bank of Zimbabwe governor John Mushayavanhu on April 5.

The ZiG started trading at a rate of ZWL 13.56 per US dollar on Monday and continued to rise, ending the week at ZWL 13.41 per US dollar after Friday's trading.

After some initial market confusion, the majority of banks, traders, and businesses were able to successfully convert their old Zimbabwe dollar balances to ZiG.

Electronic ZiG has started to circulate, and ZiG notes and coins are expected to be introduced on April 30, as stated by Mushayavanhu.

The available notes include denominations of 1, 2, 5, 10, 50, 100, and 200, along with half and quarter ZiG coins.

How the ZiG compares to Kenya shilling

The ZiG has joined Kenya shilling among African currencies that have been gaining against the US dollar in recent weeks.

While the ZiG gained to trade at ZWL 13.41 per US dollar, the Kenya shilling traded at KSh 130.39 per US dollar.

The Kenya shilling has relentlessly gained against the US dollar to become the best-performing currency in the world since it recorded its lowest value in January after crossing the 160-unit mark.

The gold-backed currency is expected to resolve the inflation and currency crisis that has bedevilled Zimbabwe for over a decade.

Proofreading by Jackson Otukho, a multimedia journalist and copy editor at TUKO.co.ke