Zimbabwe approves roadmap to abandon US dollar for new bullion-backed currency

The Zimbabwean government has given the green light to a roadmap that will see the phase-out of the U.S. dollar in favor of its new bullion-backed currency, the ZiG, for transactions within the country.

Facing a prolonged currency crisis over the past decade, the southern African nation has heavily relied on the U.S. dollar, which currently dominates about 70 percent of all economic transactions in the nation.

Encouraged by the positive performance of the ZiG in curbing inflation and maintaining a stable exchange rate, the Zimbabwean government is considering advancing the timeline for the adoption of a single currency, possibly before the initial target of 2030.

Introduced in April, the ZiG is supported by gold reserves.

"The use of the local currency is always the best way for any country to operate, we are no exception. However, when you have the kind of instability that is currently prevailing, the market defaults to a more stable currency, in this case the U.S. dollar. And unless the fundamentals underlying the local currency itself are fixed, the market will always run to safety," said Farai Mtambanengwe, chairman of the SMEs Association of Zimbabwe.

To transition successfully, Zimbabwe will need to boost exports and restore public trust in its new currency.

In Zimbabwe's predominantly cash-based informal economy, the preference for conducting business in U.S. dollars remains strong, with many hoping the multi-currency system will continue.

"The ZiG has maintained its value unlike the previous currency. If it remains as strong then it should continue to circulate with the U.S. dollar," said Pachawo Kativhu, an informal trader.

"I import the goods I sell, so using the U.S. dollar works for me. I am concerned that if we start using the ZiG only, I might not be able to access foreign currency to import," said Patience Chawanda, another informal trader.

Zimbabwe adopted the U.S. dollar in 2009 after hyperinflation decimated its local currency. This legacy could make it challenging to completely eliminate the greenback from the economy.

"The market dollarized on its own and it does not need the authorities to tell it not to use U.S. dollars. 50 to 70 percent of our market is a cash market, you cannot take away the dollars from people's pockets, from underneath their mattresses, that's where the dollars are," said Tinashe Murapata, an economic analyst.

Zimbabwe approves roadmap to abandon US dollar for new bullion-backed currency

The United States military hit a civil factory in Yemen's Hodeidah city amid its fresh round of airstrikes on the Houthi-held Red Sea port city on Monday night.

The privately-owned iron and steel plant, located in the Salif district north of Hodeidah city, was targeted by 12 U.S. missiles.

Footage recorded by a China Media Group (CMG) correspondent showed that the roof of the factory completely collapsed after the airstrike, and broken bricks and tiles, as well as shrapnel from artillery shells, could be seen everywhere.

The factory had to stop production due to the damage to the equipment.

"The attack on this plant will leave 250 to 300 workers unemployed, with material losses estimated between 13 million to 14 million U.S. dollars," said Saleh Atifa, Houthi-appointed head of Hodeidah's industrial department.

The U.S. military claimed that they were targeting military facilities, but the steel plant was completely an independent civilian plant, according to the Houthis.

"The brutal hostility of the U.S. military targets civilian facilities and other key facilities. Like the steel plant you see here, it belongs neither to the state nor to the military, nor to the security department or the Houthis. It is an independent civilian factory," said Hodeidah governor Abdullah Atifi.

Over the past two days, dozens of Houthi-controlled military sites, as well as dozens of residential houses, have been targeted and bombed by U.S. fighter jets across the Yemeni capital city of Sanaa, and several other northern and western provinces under Houthi control.

The tensions in the Red Sea are a visible manifestation of the spillover effects of the latest round of Palestinian-Israeli conflict centered on the Gaza Strip.

The renewed conflict in the Red Sea comes after Israel halted the entry of goods and supplies into Gaza Strip on March 2, coinciding with the end of the first phase of the ceasefire agreement.

On Tuesday, the Houthi group announced that it would resume launching attacks against any Israeli ship in the Red Sea, Arabian Sea, the Gulf of Aden, and the Bab al-Mandab Strait until the crossings of the Gaza Strip are reopened and aid is allowed in.

US military hits civil steel plant in Hodeidah, Yemen