Panic buying grips Zimbabwe as currency ZiG plunges 43%

In Zimbabwe, the new currency, Zimbabwe Gold (ZiG), introduced half a year ago, has experienced a sharp devaluation of 43%, triggering a buying panic and store restrictions. Entrepreneurs warn of bankruptcy, and residents fear a repeat of the 2008 crisis.

Last week, following the 43% devaluation of ZiG, a buying frenzy erupted in the country. In response, store owners instituted purchase limits of one item per person.

Starting Monday, most stores allowed customers to buy only one carton of milk, one loaf of bread, one bottle of oil, one package of rice, or one can of coffee.

A week ago, trade entrepreneurs warned that if they were forced to sell at the artificially inflated official ZiG exchange rate, it would lead to their bankruptcy. On Wednesday, managers of the country's largest supermarket chains, Pick n Pay and OK Supermarket, reported that the devaluation would most likely force them to close their outlets.

The Zimpricecheck organization, which monitors the retail sector, emphasized that "this sudden change contradicts the recent government assurances about the stability of ZiG and its purported gold backing."

The government and the Reserve Bank of Zimbabwe accuse illegal currency traders of the dire ZiG exchange rate situation. However, the fight against these traders seems ineffective, as police officers sent to the streets sabotage their orders, knowing their own salaries are losing value and trying to exchange them as quickly as possible for more stable US dollars.

Retirees are also expressing their dissatisfaction. When the new currency was introduced, their benefits were 13.9 ZiG per USD. Currently, with ZiG valued at 24.88 USD, their pensions are almost halved and arrive with an additional three-month delay.

Economist Lyle Begbie from Oxford Economics predicts that the currency devaluation might prove inadequate because "inflationary pressure and limited access to international capital markets continue to burden the economy."

Zimbabwe residents fear a repeat of 2008, when the value of one USD reached 100 billion Zimbabwe dollars, and people had to use wheelbarrows to carry their wages. They currently expect their salaries and pensions to be paid in US dollars.