Zimbabwe central bank devalues gold-backed currency by over 40% against US dollar

Zimbabwe's central bank has devalued its gold-backed currency by over 40 per cent against the US dollar, indicating that the last ditch effort to stabilise the country's volatile economy is in trouble.

The Reserve Bank of Zimbabwe made the decision to slash the local exchange rate to 24 zig to one dollar today.

This slump is due to an increase in demand for the US dollar, which is also legal tender. It comes after warnings from large retailers of store closures if the rate remained fixed at the previous level.

The Zig, which stands for Zimbabwe Gold, was launched over six months ago and is the country's sixth currency in 25 years.