(Bloomberg)
—
Zimbabwe
won’t
solve
its
economic
challenges
via
the
gold-backed
ZiG
currency
that
it
launched
in
April
and
has
since
had
to
devalue,
the
International
Monetary
Fund
said.
“There’s
a
tendency
to
see
the
market
rate,
the
exchange
rate,
as
the
cause
of
the
problems
countries
face,”
IMF
Africa
Department
Director
Abebe
Selassie
said
in
an
interview.
“In
reality,
the
exchange
rate
is
often
the
symptom
and
the
root
cause
of
exchange-rate
weakness
tends
to
be
inflation.”
Zimbabwe’s
ZiG,
short
for
Zimbabwe
Gold,
is
the
southern
African
nation’s
sixth
attempt
to
stand
up
a
stable
local
currency
since
2009
after
surging
inflation
—
fanned
by
the
government
printing
money
to
finance
spending
—
scuppered
previous
efforts.
The
ZiG
was
supposed
to
restore
confidence
through
its
backing
by
gold
and
hard
currency
reserves,
plus
a
central
bank
pledge
not
to
repeat
the
mistakes
of
the
past.
But
Zimbabweans
are
wary
of
trusting
it
after
being
burned
before.
The
unit’s
value
on
the
unofficial
market
has
steadily
slipped,
prompting
the
authorities
last
month
to
effectively
devalue
the
ZiG
by
43%,
although
its
street
value
remains
significantly
weaker.
The
ZiG
on
Friday
was
quoted
at
27.68
per
dollar
on
the
official
market,
according
to
the
central
bank’s
website.
The
unofficial
rate
ranges
between
40
to
50
to
the
dollar,
according
to
ZimPriceCheck.com.
The
greenback
remains
the
main
currency
used
in
daily
transactions.
The
nation
earlier
reported
a
surge
in
monthly
inflation
to
37.2%
in
October
from
5.8%
a
month
earlier,
fanned
by
the
devaluation.
“Sadly,
Zimbabwe
has
gone
through
these
various
cycles
and
the
root
cause
is
really
the
lack
of
confidence,
the
lack
of
faith
in
monetary
and
fiscal
policy,”
Selassie
said.
“It
goes
back
to
brass
tacks
and
needing
to
address
those
root
causes,
and
that’s
the
only
source
of
closing
the
gap
that
we
would
be
able
to
see.”