Zimbabwe to fine businesses not using new official exchange rate

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Zimbabwe Cracks Down on Businesses Using Inflated Exchange Rates for New Gold-Backed Currency

In a bid to stabilize its newly introduced gold-backed currency, the Zimbabwe Gold (ZiG), the Zimbabwean government has implemented stringent measures against businesses using inflated exchange rates. According to a government notice obtained by Reuters, any business found utilizing exchange rates higher than the official rate of 13.5 ZiG per U.S. dollar will face fines of up to 200,000 ZiG (equivalent to approximately $14,815).

The notice, issued late on Thursday, outlines that businesses offering goods or services at rates surpassing the prevailing interbank foreign currency selling rate will be deemed in violation. This move underscores the government’s determination to maintain the value and stability of the ZiG, which has faced challenges since its introduction in early April.

Zimbabwe has been grappling with efforts to bolster the ZiG amidst economic uncertainties, with authorities recently cracking down on illegal foreign currency traders. Reports suggest that certain businesses, notably supermarkets, have been imposing premiums on transactions conducted in the new currency. However, informal traders have shown reluctance to adopt the ZiG, further complicating the currency’s acceptance within the local market.

In a further attempt to enforce the use of the ZiG, Zimbabwe’s Treasury announced measures on Tuesday mandating the currency as the official unit of exchange for all transactions. This marks the fourth endeavor by Zimbabwe to establish a local currency within a decade, following the abandonment of the Zimdollar last month due to a significant devaluation of 70% since the beginning of the year.

The government’s crackdown on businesses utilizing inflated exchange rates underscores its commitment to stabilizing the ZiG and restoring confidence in the local economy. However, the effectiveness of these measures remains uncertain as Zimbabwe navigates through challenging economic terrain.

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