Zimbabwe imposes penalties for violating official ZiG exchange rate

Zimbabwe has introduced penalties for not using official exchange rates with its new ZiG currency. Offenders face fines of 200,000 ZiG ($14,782). The government aims to eliminate the parallel market by making the official rate the sole reference for trade. This move scraps previous pricing regulations to boost competitiveness. ZiG, backed by gold and reserves, faces fluctuation, trading at 13.53 to the dollar.

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By Godfrey Marawanyika and Ray Ndlovu

Zimbabwe will penalize individuals and companies which don’t use the prevailing official foreign-exchange rate of its new ZiG currency for transactions.  

The government will levy a fine of 200,000 ZiG ($14,782) on offending firms and individuals, Mthuli Ncube, the finance minister said in a statement published Thursday. The Treasury Chief had warned on Tuesday of looming regulations to enforce sole use of the official exchange rate in the economy, which is set daily by the Reserve Bank of Zimbabwe.

The government, in a bid to avoid curb the parallel market, has made the official ZiG exchange rate the only reference for trade in the currency. 

The new rule now also scraps a previous requirement for retailers to price their goods within 10% of the official exchange rate for profits. The regulation made them uncompetitive against informal traders in the fight for dollars as their goods became expensive. 

The ZiG, short for Zimbabwe Gold, was unveiled on April 5 and succeeded the Zimbabwean dollar, which had lost 80% of its value this year. The new unit is the sixth attempt by the southern African nation to have a functioning local currency. It is backed by 2.5 tons of gold and about $100 million in foreign currency reserves held by the central bank.

Banknotes and coins of the ZiG were released at the end of last month to the public.

The ZiG was trading at 13.53 to the dollar on Thursday, according to data posed on the central bank’s website. It fell Monday to a record low of 13.67 to the dollar since its debut a month ago.

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