Zimbabwe launched new currency on Friday which will replace the previous one that has been battered by depreciation in the recent months.
The new curreny is expected to take effect from Monday.
The Zimbabwe dollar has come under sustained pressure in recent weeks, making it one of the world’s worst performing currencies.
The Zimbabwe dollar lost over 70% of its value on the official market since January, and was plunging even further on the thriving but illegal black market.
Inflation increased from 26.5% in December last year to 34.8% this January before spiking to 55.3% in March, according to official figures.
Traders were increasingly rejecting lower denominations of the now scrapped currency, with many insisting on payment only in U.S. dollars, which are also legal tender in the southern African country.
John Mushayavanhu Governor Reserve Bank of Zimbabwe said the new currency will be called ZiG, and will be anchored on gold reserves and a basket of foreign currencies.
“We are doing what we are doing to ensure that our local currency does not die. We were already in a situation where almost 85% of the transactions are being conducted in U.S dollars,” Mushayavanhu told reporters in the capital, Harare. People have three weeks to exchange the old notes with the new currency, he said.
The declaration made on Friday is the most recent in a series of currency-related actions the Zimbabwean government has made since the Zimbabwe dollar’s initial, dramatic collapse in 2009.
During that time, the nation issued a 100 trillion dollar banknote in Zimbabwe before being compelled to temporarily discontinue using its own currency and accept US dollars as legal money.
When the nation reintroduced a domestic note in 2016, it signalled the start of a new wave of currency instability that was emphasised by policy changes, one of which was the 2019 prohibition on using foreign currencies, including the US dollar, for domestic transactions.
