Business Reporter
Zimbabwe’s local currency, the ZWG, is projected to strengthen in the fourth quarter of the year as demand rises for tax payments, according to Finance Minister Mthuli Ncube.
Since last year, the Reserve Bank of Zimbabwe has implemented tight monetary policies designed to stabilize prices, the currency, and the exchange rate. One key measure has been maintaining a high policy interest rate, currently set at 35%, to combat speculative borrowing, which has contributed to excess liquidity and illicit parallel market trading.
These measures appear to be having an effect, with the exchange rate premium remaining stable for over a year, leading to a significant reduction in annual inflation, which has fallen by more than 50%, now standing at 32.7%.
Speaking to Parliament in Bulawayo on Wednesday, Ncube expressed confidence that the ZWG would continue to appreciate as 2025 comes to a close.
“Demand for ZWG will increase as businesses settle their fourth-quarter taxes, which is expected to support the currency’s appreciation,” Ncube said. “We anticipate continued exchange rate stability, supported by widespread confidence in the ZWG and the government’s ongoing fiscal and monetary measures.”
He credited the stability of the exchange rate—currently pegged at US$1: ZWG 26.68—to aggressive policies aimed at shielding the currency from volatility.
“The parallel market premium has been kept in check, falling below 25% in August 2025, aligning with other countries such as Kenya and Zambia,” Ncube added.
The Finance Minister also highlighted the success of the country’s foreign currency reserve strategy, particularly the introduction of the ZWG. Foreign currency reserves have grown significantly, rising from less than US$300 million in April 2024 to more than US$900 million by September 2025, with a target of reaching US$1 billion by December 2025.
Both gold and USD reserves are expected to play a key role in strengthening the ZWG, offering greater stability to the currency and enabling it to back reserve money and deposits.
Looking ahead, Ncube projected inflation would average 61.3% in 2025, with a year-end target of 22.8%. He expects inflation to fall to single-digit levels by 2027, supported by sustained exchange rate stability and prudent fiscal and monetary management.
