Zimbabwe has clocked a full year since adopting of the Zimbabwe Gold (ZiG) currency, which has achieved commendable stability evidenced by low inflation and exchange rate predictability, anchored by prudent monetary policy management and other supportive Government measures.
The Reserve Bank of Zimbabwe (RBZ) introduced the ZiG on April 5 last year, and since then, the local unit has defied odds, amid growing market confidence with positive impact on the entire economy.
Despite scepticism and resistance to transact using the local currency by some speculators, major monetary policy indicators have shown that the ZiG is gaining higher economic momentum.
In a comprehensive report over the weekend, RBZ Governor Dr John Mushayavanhu said prudent monetary policy formulation and implementation pursued by the central bank since April last year had been credited for creating relative price, currency and financial stability.
The stability is evidenced mainly by the lower monthly ZiG inflation, which stabilised to 0.5 percent in February this year and -0.1 percent last month.
The significant decline in money supply growth was also consistent with the tight monetary policy stance of the central bank.
As a result of this stance, the RBZ has succeeded in curtailing the pass-through effects of money supply to the exchange rate and inflation.
The RBZ has committed to sustaining this momentum with higher stakeholder support, building a path to long-term de-dollarisation, and has vowed to do whatever it takes to ensure that prices remain stable, notwithstanding external pressures and headwinds from the global economy.
There has also been greater exchange rate stability, with foreign exchange parallel market premiums crumbling below 20 percent from about 100 percent.
The exchange rate has been relatively stable since October last year, with the premium narrowing in September of the same year to levels around 20 percent in March 2025 in line with the stabilisation of the parallel market rate to around ZiG33-34 per US-dollar.
Hopes are high that the additional measures to deepen the foreign exchange market announced in the Monetary Policy Statement on February 6, 2024 will further reinforce the prevailing stability on the exchange rate front.
Foreign currency inflows on one hand have risen from US$11 billion in 2023 to US$13,3 billion in 2024, resulting in the continuation of the current account surpluses since 2019.
Dr Mushayavanhu said the increased availability of foreign currency to cater for all bona fide foreign payments and the sustained financial sector stability and soundness tells the whole story.
"The Reserve Bank reaffirms its commitment to 'walk the talk' of consistent and prudent monetary policy management to sustain price, currency and financial stability," said the RBZ Governor.
"As such, the Reserve bank will remain vigilant to any emerging domestic and external risk to inflation while simultaneously putting in place appropriate measures to strike the delicate balance between stability and economic growth".
He said the obtaining low inflation and exchange rate stability anchored by prudent monetary policy management and other supportive measures will continue to be the guiding monetary policy frame work of the reserve bank.
"Within this context, inflation expectations are expected to remain well-anchored with month-on-month inflation projected to average below three percent in 2025 consistent with exchange rate stability.
"Given the base effects largely caused by the spike in monthly inflation in October 2024, annual inflation is expected to start at relatively higher levels between April 2025 to September 2025," said Dr Mushayavanhu.
Going forward, inflation is expected to significantly moderate to end the year 2025 at less than 30 percent, thus supporting the envisaged economic growth of six percent in 2025.
Similarly, ZiG loans have grown at an average of one percent per week since October 2024 compared to 6,9 percent during the period before September 27, 2024.
In that regard, Dr Mushayavanhu said the proportion of the local currency deposits now sits at 15,95 percent while total loans amounted to ZWG50,70 billion as at March 2025, with the proportion of the local currency denominated loans being 12,04 percent.
The RBZ Governor said the bank's foreign reserves accumulation strategy has continued to bear positive fruit as attested by the significant build-up of foreign currency reserves, from US$276 million at the end of April 2024 to US$629 million as of last month.
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"The foreign reserves have been adequate to cover reserve money as per Reserve Bank's commitment and are also currently sufficient to cover the entire ZWG deposits in the banking sector, pointing to the sustained ZiG stability," he said.
Anchored on these measures, Dr Mushayavanhu said Zimbabwe has continued to receive foreign currency inflows enough to cover its external obligations and leaving a sizeable surplus.
"The surplus, which averaged US$400 million per month for the 14 months from January 2024 to February 2025, has been crucial in supporting domestic transactions," he said.
Dr Mushayavanhu said foreign currency receipts averaged US$1,1 billion per month during the period January 2024 to February 2025 while the country's external obligations averaged US$784 million per month during the same period.
Meanwhile, the RBZ has said concerted efforts are being made to ensure delivery of new higher value ZiG bank notes "in the shortest possible time" to enhance convenience for the transacting public.
