Zimbabwe's central bank says its gold-backed money has enough reserves and stays steady. The Reserve Bank kept interest rates at 35 percent on Monday and reported 701 million dollars in total reserves. Bank officials said more people used the Zimbabwe Gold currency during May compared to April. The new money made up 43 percent of all purchases last month versus 26 percent when it started. Most citizens still prefer American dollars for shopping because past money problems hurt their trust.
Government leaders hope the gold backing will make people feel safe using the local currency. The central bank governor promised to keep the money stable and valuable for savers. He said the bank learned from earlier currency failures about controlling money supply. Street traders notice the exchange rate stayed the same for three months running. One black market dealer said the stability comes from having very little local currency available rather than people gaining confidence.
The gap between official rates and street rates remains around 20 percent different. International lenders welcome the currency stability but want tighter controls on money growth. Zimbabwe owes 12.2 billion dollars to outside creditors and needs to pay these debts. The finance minister wants to raise 2.6 billion dollars for bridge loans within two years. Investment experts stay careful about putting money into Zimbabwe until more progress happens.
Government leaders hope the gold backing will make people feel safe using the local currency. The central bank governor promised to keep the money stable and valuable for savers. He said the bank learned from earlier currency failures about controlling money supply. Street traders notice the exchange rate stayed the same for three months running. One black market dealer said the stability comes from having very little local currency available rather than people gaining confidence.
The gap between official rates and street rates remains around 20 percent different. International lenders welcome the currency stability but want tighter controls on money growth. Zimbabwe owes 12.2 billion dollars to outside creditors and needs to pay these debts. The finance minister wants to raise 2.6 billion dollars for bridge loans within two years. Investment experts stay careful about putting money into Zimbabwe until more progress happens.
