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
Long-standing challenges in Mexico's automotive industry have been exacerbated with the implementation of the U.S. tariff on imported cars, which took effect Thursday, fueling uncertainty and job losses.
Last month, U.S. President Donald Trump announced a 25 percent tariff on all imported automobiles.
Ciudad Juarez, one of Mexico's largest trade ports and a key manufacturing hub, is now facing even greater challenges as rising trade protectionism deepens existing pressures.
At a medal parts manufacturing factory that has been in operation for over 30 years, the workforce has drastically reduced from 60 workers to just 25 due to uncertainty about the future.
Even before the U.S. tariffs on imported cars took effect, mounting pressure had already begun to ripple through the industry, prompting many companies to suspend investment and procurement plans.
"Some 95 percent of the products exported from Chihuahua, where Ciudad Juarez is located, are industrial manufactured goods. We have held multiple meetings to discuss solutions. In fact, over the past year and a half, more than 55,000 factory workers here in the city have lost their jobs," said the owner of the factory.
The automotive industry is a key pillar of Mexico's economy, generating nearly 100 billion U.S. dollars in output. The auto parts assembly industry alone provides over 900,000 jobs for the country, while automotive assembly companies create 175,000 jobs.
According to statistics from the Mexican Association of Automotive Dealers (AMDA), over 40 percent of the components used by American auto manufacturers are imported from Mexico. Last year, Mexico produced four million cars, approximately three million of which were exported to the U.S.
Industry insiders indicate that due to the high degree of interdependence in the sector between the U.S. and Mexico, along with a shortage of skilled labor, the U.S. goal of bringing automotive manufacturing back to its shores through tariffs is unlikely to be realized in the short term.
Moreover, the established industrial chain in Mexico faces the risk of being disrupted, which will ultimately have repercussions on consumer spending and further exacerbate inflation in the long run.
"Young people from the U.S. are no longer willing to work in the manufacturing sector. I believe there will be no growth in the relocation of automotive parts and vehicles factories in the short term," said Guillermo Rosales Zarate, ADMA's executive president.
"Personally, I hope this avalanche of tariffs doesn't continue; otherwise, it will lead to more significant issues affecting the U.S. economy. If these tariffs remain in place long-term, it will be the American people who suffer the most," said Ricardo Ramos, a professor with the Autonomous University of Ciudad Juarez.
U.S. automotive tariffs deepen industry pressures, halt investments in Mexico
