Zimbabwe Gold, also known as ZiG, has performed impressively since it was introduced to the market in April of this year.
Zimbabwe ZiG has retreated against the USD
The USD/ZIG exchange rate moved from 13.3 on April 19th to 13.76, its highest point on record. This performance has made it relatively stable, and it has won praise from a team from the International Monetary Fund (IMF) that visited the country recently.
This stability has happened because of the central bank’s pledge not to intervene by printing more currencies as it has done in the past. It also happened as the government intensified its crackdown on the parallel market has intensified.
These traders have been blamed for crashing the previous currencies, including the RTGS-based Zimbabwe dollar.
Another reason for the stability is that the central bank has kept ZiG’s supply low. As a result, many people in Zimbabwe have never seen ZiG’s banknote. According to Bloomberg, many Zimbabweans have warned that the currency is only stable because it is unavailable.
The government has also welcomed ZiG’s stability and has hinted that it will make it the sole legal tender before 2030, as promised.
However, analysts caution that the currency faces substantial risks ahead. For one, ZiG is a novel approach that aims to stabilize the currency by backing it with 2.5 tons of gold and $100 million in cash.
The central bank hopes to use the country’s gold resources to back it up. This makes it a big experiment that could fail, as the other Zimbabwean currencies have done in the past.
The other risk for the currency is that many Zimbabweans have suffered from previous currency crashes. As a result, most people in the country have moved to the US dollar, which is more stable. More than 80% of transactions in Zimbabwe are implemented in dollars.
Interest in Tether is increasing
Google data shows that more people in Zimbabwe are searching for Tether (USDT), the biggest stablecoin in the world. As shown below, searches for the terms Tether and USDT have risen from zero in June to 60 and 56, respectively.
Tether and USDT Google search stats
Tether is a popular stablecoin with over $112 billion market cap. Unlike Bitcoin, which has become a store of value, Tether has become a medium of exchange in many countries since the US dollar backs it.
Tether is the only large cryptocurrency that is seeing more search volume in Zimbabwe. After peaking at 100 in February, the search for Bitcoin has dropped to 59.
Just recently, Zimbabwe asked for public comments as it works to launch a framework for the cryptocurrency industry.
