Zimbabwe is set to impose fines on businesses that utilise exaggerated exchange rates as it strives to uphold the value of its new gold-backed currency, the Zimbabwe Gold (ZiG). According to a government announcement, businesses charging rates above the official 13.5 ZiG per U.S. dollar will face a significant penalty of 200,000 ZiG (approximately $14,815).
The notice, issued late on Thursday, specifies that any entity offering “goods or services at an exchange rate higher than the prevailing interbank foreign currency selling rate” will be committing a civil infringement. The government has actively been taking measures to stabilise the ZiG since its launch in early April, including a crackdown on illegal foreign currency trading last month.
Despite these efforts, some businesses, including supermarkets, have been demanding a premium from customers paying in ZiG, and informal traders are refusing the currency. This enforcement comes as the Treasury declared the ZiG the official currency for transactions on Tuesday, making it Zimbabwe’s fourth attempt to establish a local currency within a decade after the recent devaluation of the Zimdollar, which lost 70% of its value since January.
Minister of Finance, Economic Development, and Investment Promotion, Mthuli Ncube, reinforced on Tuesday that the ZiG is now the mandatory currency for all financial dealings. The government aims to foster market acceptance and boost confidence in the new currency through these regulations.
The government also reiterated that all ministries, departments, agencies, and the private sector must recognise the ZiG for all financial transactions. The Public Finance Management System (PFMS) is currently being adjusted to support this change, facilitating revenue collection and payments in ZiG.
Although the ZiG has maintained stability in the official market since its introduction, it has encountered difficulties in the parallel market where traders demand a 65% premium over the official rate for dollars. In response, the government has introduced a liberalised foreign exchange market, allowing the banking system to freely determine the exchange rate based on supply and demand.
Ncube assured that the Reserve Bank of Zimbabwe holds adequate gold and foreign exchange reserves to support the local currency supply, guaranteeing that all legitimate foreign exchange requests through the banking system will be met. He stressed that the prevailing average interbank foreign currency selling rate, published by the Reserve Bank, should be used exclusively for pricing goods and services. The government plans to enact regulations to enforce this rule and ensure orderly pricing across the market.
