Zimbabwe Gold (ZiG), the new currency that evolved from a gold-backed token, has performed well on the foreign exchange market, but has faced difficulties at home. The ZRB announced new steps to combat the black market for the currency and improve its usability on June 4.

The Zimbabwe Reserve Bank (ZRB) appealed directly to the public via its X account to urge people to turn in illegal currency traders or businesses that refuse to accept its new currency. This was part of a continuous effort to combat illegal foreign exchange trading, sometimes at unofficial rates. According to Bloomberg, the ZiG has gained 1.9% against the United States dollar since its introduction in physical form.

ZiG introduction has mixed success

On May 15, South African-based Crime Watch Zimbabwe reported that police in Zimbabwe had arrested 224 illegal FX traders, and the RBZ Financial Intelligence Unit (FIU) froze 90 bank accounts and fined 40 people. The FIU was also monitoring activity in bank services to uncover evidence of illegal ZiG dealing.

The organization reported that the crackdown resulted in “a significant decline in the number of illegal money changers operating in the Central Business District (CBD) [of the capital Harare] and surrounding areas.” Judging from the June 4 RBZ X post, the struggle continues.

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Apparently, a lack of coins is another issue troubling the central bank. “The Bank particularly seeks to expand economy-wide availability of small change in the following denominations, ZiG1, ZiG2, ZiG5, ZiG10,” the RBZ stated in an X post that went up several hours after the message about illegal traders.

The RBZ also said ZiG cash would be available for withdrawal from the government-owned Homelink financial services company using debit cards in seven cities beginning on June 10, and other financial institutions would offer the service in the future.

ZiG gets mixed reviews

The ZiG is Zimbabwe’s sixth currency in 15 years. It is backed by gold and foreign currency but began as a digital currency tied to the price of gold. It was introduced in physical form in April and was greeted with a mixed response from the public.

The gold-backed token, now called the GBDT (gold-backed digital token), was doubted and criticized because of its resemblance to central bank digital currency. The GBDT now functions as an “investment instrument” separately from the physical Zig. Several foreign currencies are still legal to use in Zimbabwe.

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