The capital of Zimbabwebu Source: Photo.com
According to the Observation Network, since the beginning of this year, Zimbabwe's original currency, the Zimbabwean dollar, has depreciated by more than 80%, becoming the second worst country in the world in terms of exchange rate performance.
According to the International Monetary Fund, since 2008, Zimbabwe's inflation rate has been as high as 50000000000000%. In response, Zimbabwe introduced a new currency, Zimbabwe Gold Coin (ZiG), on April 5 with the intention of stabilizing financial markets.
However, the introduction of the new currency directly destroyed Zimbabwe's capital market, and the Zimbabwe all-share index closed at 96.33 points on April 23. The Zimbabwean stock market rose more than 330% from the beginning of the year until the new currency was issued, reaching an all-time high on April 5, followed by a plunge from 915,936.81 to 100.23 on April 8, a one-day decline of more than 99.99%, and a year-to-date decline of 99.95%.
"Zimbabwe's monetary reform will be a failure, like all monetary reforms in the past 16 years, and Zimbabwe needs a radical political reform, not a one-size-fits-all monetary reform," said South African commentator Malala. "It's still early days, but the future of the new currency is already clear," he said. While the ZiG was stronger than the South African rand when it debuted (the South African rand is as widely used in the country as the US dollar), ZiG cannot buy fuel in Zimbabwe. ”
It is understood that the Republic of Zimbabwe (The Republic of Zimbabwe, referred to as "Zimbabwe") is a landlocked country in southeast Africa, with a land area of 390,000 square kilometers and the capital Harare. Zimbabwe is a country with a more developed industry in Africa, with manufacturing, agriculture and mining as the three pillars of the economy. The country is rich in natural resources and has a good industrial and agricultural foundation, and was once the world's third largest tobacco exporter. In 2022, Zimbabwe's GDP (nominal) was US$25 billion, the economic growth rate (real) was 3.4%, and the per capita GDP was US$1,634.
Zimbabwe's currency issue has attracted the attention of the international community, and the Chinese currency, as one of the world's important currencies, has been developing steadily. China's sustained economic growth and steady progress in financial reform have made the renminbi one of the most important currencies for global trade and investment.
Global economic growth rate
Looking back at 2023, the global economy has shown a slow and uneven post-COVID recovery, facing multiple challenges such as high inflation, tighter monetary policy, and tighter credit conditions. According to the International Monetary Fund (IMF), global economic growth will slow to 3.0% in 2023 from 3.5% in 2022. The unsustainability of global debt, and the resulting series of national and regional bankruptcies and debt defaults, have had a negative impact on international financial markets and investor confidence.
The renminbi is the third most weighted in the SDR basket of currencies
On October 1, 2016, the IMF officially included the RMB in the SDR, and the RMB became a member of the SDR currency basket, marking the official establishment of the RMB as an international reserve currency. As of 2021, the renminbi has the third highest weighting in the SDR currency basket at 10.92%, reflecting the relative importance of the renminbi in the world trade and financial system.
Foreign exchange reserves stood at $3,184.5 billion at the end of January 2023
In recent years, the size of the mainland's foreign exchange reserves has been at the level of $3 trillion. Since 2022, foreign exchange reserves have shown a downward trend, with the lowest amount of foreign exchange reserves at $3.03 trillion at the end of September 2022. As of the end of January 2023, the size of the mainland's foreign exchange reserves was US$3,184.5 billion, an increase of US$56.8 billion, or 1.82%, from the end of 2022.
In January 2023, affected by global macroeconomic data, monetary policy expectations of major economies and other factors, the US dollar index fell, and global financial asset prices rose overall. Factors such as exchange rate translation and changes in asset prices combined to increase the scale of foreign exchange reserves in the month. The mainland's economy continues to recover and show an upward trend, and the endogenous driving force continues to increase, which is conducive to maintaining the basic stability of the scale of foreign exchange reserves.
Gao Haihong, director and researcher of the Center for International Finance of the Institute of World Economics and Politics of the Chinese Academy of Social Sciences, believes that in the international monetary system, the renminbi is still an undervalued currency, and there is still a large asymmetry between the degree of internationalization of the renminbi and China's position in the global economy.
Experts say that the future development of the internationalization of the renminbi will still depend on whether China maintains a pivotal position in the global economy, on the continuous advancement of China's high-level opening up, on China's determination to reform and develop the domestic financial market, and on China's seizing opportunities to enhance the international functions of the renminbi in important areas.
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