Bloomberg News: Zimbabwe’s Currency

March 22, 2024

Zimbabwe’s switch to a gold-backed dollar

Running Point and its chief investment officer, Michael Ashley Schulman, CFA, were quoted by Bloomberg News in an article — by Colleen Goko-Petzer and Ray Ndlovu, “Battered Zimbabwe Currency Falls Past 20,000 Per Dollar in Official Trade” — regarding whether Zimbabwe is about to abandon its current currency (ZWL) for a new one backed by gold, how feasible it is, and our general outlook for the currency.

The country and economy

🌍Zimbabwe is a land-locked country of 15MM people—that to the east borders Mozambique—that gained independece in 1980. Its main exports are platinum, gold, diamonds, and agriculture. The country has weathered volatile and often negative growth, bouts of high inflation, and several currency regimes. Longer-term stability will depend on economics and government trust.

Article excerpts are below:

The postponement has caused anxiety locally, but most outside investors have already abandoned Zimbabwe’s currency, said Michael Ashley Schulman, chief investment officer and partner at Running Point Capital Advisors.

“The major concern for people in the country is that if Zimbabwe does switch to a gold backed currency, they will do it at an exchange rate favorable to the new currency and unfavorable to citizens, thus leading to a further last minute devaluation,” Schulman said. “In other words, if you have Zimbabwean dollars, you want to spend them as quickly as possible on something tangible.”

Having a gold backed currency won’t necessarily stop future devaluations from occurring, Schulman added. “The government can still print money and change its currency ratios.”

an dollar The primary currency in Zimbabwe is the Zimbabwean dollar (ZWL), now backed by gold
Zimbabwe Currency, backed by gold? — Graphics and design by

The pool that is calm is where the crocodiles live.

What is loaned to you can be taken from you even when you still need it.

Zimbabwean proverbs

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