THE continued increase in foreign currency reserves, which have since risen to US$900 million, has contributed to the strengthening of Zimbabwe Gold (ZiG) against the US dollar, raising hopes that the year-long currency and price stability will be sustained.
Yesterday marked a year since the Reserve Bank of Zimbabwe (RBZ) devalued ZiG.
Since the intervention, the local currency has continued to gain in value, a move that has seen rates used by retail outlets and those obtaining on the parallel market converging.
Currently, parallel market rates are pegged at US$1:ZiG32, similar to the rate being quoted in major retail shops across the country.
Month-on-month inflation has averaged 0,6 percent between February and August this year.
RBZ Governor Dr John Mushayavanhu told The Sunday Mail that stability in the exchange rate and inflation has supported strong economic activity and greater growth momentum.
Foreign currency inflows in the January to August period, for example, have increased to US$10,4 billion, up from US$8,2 billion in the same period last year, driven mainly by gold and tobacco exports.
Overall, the economy is now expected to exceed the initial growth target of 6 percent.
“The low and stable month-on-month inflation is supporting the disinflation trajectory, which will result in annual ZiG inflation undershooting the initial target of 30 percent to levels around 20 percent by the end of 2025 and reaching single-digit levels in the early months of 2026,” Dr Mushayavanhu said.
“The sustained stability in the exchange rate and inflation has supported robust economic activity and greater growth momentum in the economy. As a result, the economy is anticipated to exceed its initial growth target of 6 percent and attain an anticipated 6,6 percent in 2025.
“The significant stability and convergence of the ZiG was underpinned by a combination of decisive monetary policy measures, prudent money supply management, enhanced exchange rate flexibility, increased foreign currency receipts and accumulation of foreign reserves . . .
“The sustained increase in foreign currency receipts supported the continued build-up of foreign reserves backing ZiG, a critical success factor for exchange rate stability. Notably, the country’s foreign currency reserves are at levels of about US$900 million, up from just over US$700 million at the end of June 2025 and more than double the US$419 million recorded in September 2024.”
With the country’s import bill hovering around US$800 million, Zimbabwe’s foreign currency reserves are well on their way to reaching the three- to six-month import cover that is considered to be the international benchmark to anchor durable stability.
Fiscal restraint by the Government, Dr Mushayavanhu added, has contributed to the stability of the local currency.
“Moreover, the Reserve Bank’s commitment to ‘staying the course’ boosted confidence in monetary and financial affairs, thus eliminating the credibility premium on the exchange rate and inflation fronts,” he said.
“These measures have also been supported by fiscal restraint and prudence, with the Government striving to live within its means without recourse to central bank financing. The Reserve Bank’s commitment to prudent monetary policy management will sustain this trajectory and ensure that it meets its objective of price, currency and exchange rate stability in the economy.”
Dr Mushayavanhu said the central bank will maintain a vigilant and flexible monetary policy, as well as regulated measures to manage risks, sustain price and exchange rate stability, and adjust policies proactively as needed.
The ZiG currency was introduced in April 2024 to replace the Zimbabwe dollar, with the authorities insisting that stronger reserves and improved currency infrastructure are key to restoring public confidence.
-Zimpapers
