Zimbabwe knocks 40% off value of gold-backed currency

ZIMBABWE: Zimbabwe’s central bank has devalued its gold-backed currency by over 40% against the US dollar, indicating that the last ditch effort to stabilise the country’s volatile economy, is in trouble.

The Reserve Bank of Zimbabwe (RBZ) made the decision to slash the local exchange rate to 24 Zig to $1 (£0.75) on Friday.

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This slump is due to an increase in demand for the US dollar, which is also legal tender. It comes after warnings from by large retailers of store closures if the rate remained fixed at the previous level.

The Zig, which stands for Zimbabwe Gold, was launched over six months ago and is the country’s sixth currency in 25 years.

According to the Reuters new agency, RBZ said in a statement that its Monetary Policy Committee made the move to allow greater exchange rate flexibility.