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ZiG to the Rescue: Zimbabwe Shifts Gear with New Currency Backed by Gold

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Zimbabwe has announced the launch of a new currency called ZiG, backed by a combination of gold and foreign reserves.

This decision represents a significant shift in the nation’s economic strategy as it strives to stabilize its financial landscape.

The announcement came during a press conference held by Central Bank Governor John Mushayavanhu in the capital city of Harare.

Explaining the necessity of establishing a solid and stable national currency, Mushayavanhu said, “We want a solid and stable national currency in this country. It does not help to print money. Certainly under my watch it is not going to happen.”

Zimbabwe’s economy has been plagued by hyperinflation and currency instability for years. The previous Zimbabwean dollar had lost four-fifths of its value on the official market since the beginning of the year, earning it the title of the world’s second worst-performing currency.

This depreciation has led to widespread dollarization with over 80% of transactions being conducted in foreign currencies.

The introduction of ZiG represents Zimbabwe’s sixth attempt to establish a functional local currency since the catastrophic hyperinflation crisis of 2008, when inflation soared to unfathomable levels, rendering the currency practically worthless.

To foster demand for the new currency, Zimbabwean authorities have mandated that companies settle at least 50% of their tax obligations using ZiG.

This move aims to encourage the adoption of the currency in commercial transactions and stimulate its circulation within the economy.

Mushayavanhu said  ZiG will be fully backed by a combination of gold and other precious metals as well as foreign currency reserves held by the central bank.

This commitment to tangible assets is intended to rebuild public confidence in the national currency and provide a safeguard against future economic instability.

According to the central bank’s statement, Zimbabwe’s reserves currently include $100 million in cash and 2,522 kilograms of gold valued at $185 million.

This reserve holding provides a strong foundation for the ZiG currency, with reserves exceeding three times the currency being issued.

The introduction of ZiG comes after President Emmerson Mnangagwa’s government hinted at the implementation of a “structured currency” earlier this year.

Despite initial delays, the unveiling of ZiG demonstrates a renewed commitment to reforming Zimbabwe’s monetary policies and restoring economic stability.

As Zimbabwe prepares to launch ZiG on April 8th at an introductory rate of 13.56 per dollar, hopes are high for a resurgence in economic confidence and a reversal of the country’s prolonged currency struggles.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Forex

Bureau De Change Operators Demand CBN Reversal on New Capital Requirement

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Bureau De Change Operator

In a move that underscores growing tensions between the Central Bank of Nigeria (CBN) and the Association of Bureau De Change Operators of Nigeria (ABCON), the latter has vehemently demanded the reversal of the new capital requirements set forth by the apex bank.

The CBN recently issued fresh guidelines for the operations of Bureau De Change (BDC) operators, introducing two new categories of licenses with significantly higher capital bases.

The Tier 1 category necessitates a minimum capital requirement of N2 billion, alongside non-refundable application and license fees of N1 million and N5 million, respectively.

Similarly, Tier 2 BDCs are mandated to maintain a minimum capital base of N500 million, with corresponding fees.

This move by the CBN has elicited strong opposition from BDC operators, who argue that the new requirements pose a significant threat to their businesses.

During a virtual meeting themed “New CBN Regulatory & Supervisory Reforms for BDCs: Challenges and Way Forward,” the association presented recommendations aimed at addressing their concerns.

ABCON President, Aminu Gwadebe, emphasized the urgency of the situation, demanding the immediate reversal of the financial requirements.

He proposed a return to the previously submitted proposal, suggesting capital thresholds of N500 million for Tier 1, N100 million for Tier 2, and N35 million for Tier 3.

Also, he advocated for existing BDC owners to be given the opportunity to recapitalize instead of reapplying for licenses.

The association further urged the CBN to recognize the existing N35 million capital requirement and incorporate it into the recapitalization process.

They called for a nationwide enlightenment campaign to allay investors’ fears and an extension of the compliance timeline to two years for fairness. Furthermore, existing BDCs should be permitted to retain their generic names, and the terms of engagement for mergers and acquisitions clarified.

Operators expressed outright rejection of the new guidelines, with concerns raised about the CBN’s perception of their role in the financial sector.

Ibrahim Bala voiced the collective sentiment, labeling the guidelines as unacceptable, while Kayode Taiwo questioned the government’s motives behind the capital hike.

In response, the CBN defended its stance, emphasizing the importance of corporate governance and compliance with anti-money laundering regulations for BDC operators.

As the standoff between BDC operators and the CBN intensifies, the outcome of this dispute will likely shape the future landscape of Nigeria’s foreign exchange market.

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Naira

Black Market Dollar (USD) to Naira (NGN) Exchange Rate Today 29th May 2024

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 29th, 2024 stood at 1 USD to ₦1,520.

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New Naira Notes

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 29th, 2024 stood at 1 USD to ₦1,520.

Recent data from Bureau De Change (BDC) reveals that buyers in the Lagos Parallel Market purchased a dollar for ₦1,510 and sold it at ₦1,500 on Monday, May 28th, 2024.

This indicates a decline in the Naira exchange rate when compared to today’s rate.

The black market rate plays a crucial role for investors and participants, offering a real-time reflection of currency dynamics outside official or regulated exchange channels.

Monitoring these rates provides insights into the immediate value of the Naira against the dollar, guiding decision-making processes for individuals and businesses alike.

It’s important to note that while the black market offers valuable insights, the Central Bank of Nigeria (CBN) does not officially recognize its existence.

The CBN advises individuals engaging in forex transactions to utilize official banking channels, emphasizing the importance of compliance with regulatory frameworks.

How much is dollar to naira today in the black market

For those navigating the currency exchange landscape, here are the latest figures for the black market exchange rate:

  • Buying Rate: ₦1,520
  • Selling Rate: ₦1,510

As economic conditions continue to evolve, staying informed about currency exchange rates empowers individuals to make informed financial decisions. While the black market provides immediate insights, adherence to regulatory guidelines ensures stability and transparency in forex transactions.

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Naira

Black Market Dollar (USD) to Naira (NGN) Exchange Rate Today 28th May 2024

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 28th, 2024 stood at 1 USD to ₦1,510.

Published

on

Naira Exchange Rates - Investors King

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 28th, 2024 stood at 1 USD to ₦1,510.

Recent data from Bureau De Change (BDC) reveals that buyers in the Lagos Parallel Market purchased a dollar for ₦1,520 and sold it at ₦1,510 on Monday, May 27th, 2024.

This indicates an improvement in the Naira exchange rate when compared to today’s rate.

The black market rate plays a crucial role for investors and participants, offering a real-time reflection of currency dynamics outside official or regulated exchange channels.

Monitoring these rates provides insights into the immediate value of the Naira against the dollar, guiding decision-making processes for individuals and businesses alike.

It’s important to note that while the black market offers valuable insights, the Central Bank of Nigeria (CBN) does not officially recognize its existence.

The CBN advises individuals engaging in forex transactions to utilize official banking channels, emphasizing the importance of compliance with regulatory frameworks.

How much is dollar to naira today in the black market

For those navigating the currency exchange landscape, here are the latest figures for the black market exchange rate:

  • Buying Rate: ₦1,510
  • Selling Rate: ₦1,500

As economic conditions continue to evolve, staying informed about currency exchange rates empowers individuals to make informed financial decisions. While the black market provides immediate insights, adherence to regulatory guidelines ensures stability and transparency in forex transactions.

Continue Reading
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