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Zimbabwe's foreign currency reserves surge
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Zimbabwe's foreign currency reserves have maintained strong momentum, with the Reserve Bank of Zimbabwe (RBZ) reporting that, by the end of June 2025, the reserve holdings were more than three times higher than the stock of reserve money supporting the Zimbabwe Gold (ZiG) currency. This firm backing, composed of gold, foreign currency cash, and Nostro balances, is considered a critical pillar in maintaining the value and credibility of the ZiG.
The RBZ revealed that foreign reserves rose to US$731 million in June, up from US$639 million in May and a significant jump from US$276 million in April last year, when the ZiG was introduced. The ZiG, launched in April 2024 to replace the hyperinflation-stricken Zimbabwe dollar, was initially anchored by US$100 million in cash and 2,522 kilogrammes of gold worth US$185 million. The aim was to establish a stable and predictable monetary system by tying the currency to tangible assets.
In its second-quarter monetary policy update, the RBZ stated that the growth of the local currency component of reserve money remains under firm control. It reiterated that the reserve money growth strategy aligns with its target to bring annual inflation down to below 30 percent by December 2025. The bank said this restraint is central to achieving macroeconomic stability.
The RBZ also highlighted growing use of the ZiG in domestic transactions as a sign of increasing public confidence. Data from the National Payments System indicated that local currency transactions reached 43 percent in May 2025, up from 32 percent in April, before easing slightly to 35 percent in June. Despite the dip, the overall trend pointed to a rising acceptance of the ZiG, which authorities attribute to continued efforts to improve its circulation, including the wider availability of notes, coins, and Point-of-Sale (POS) machines.
The central bank emphasised that it remains watchful over the expansion of ZiG within the broader money supply. Preliminary data for June showed a slower month-on-month growth of 7.4 percent, compared to 16 percent recorded in May 2024. According to the RBZ, this moderation is consistent with broader economic growth expectations and efforts to preserve exchange rate stability.
The bank's tight monetary stance has also bolstered the lending environment. Between January and June 2025, average weekly growth in ZiG-denominated loans stood at 0.7 percent, while US dollar loans rose by 0.56 percent. The share of ZiG loans to total lending has also increased, with the loan-to-deposit ratio for the ZiG growing from under 30 percent in April 2024 to 45 percent in May 2025. The RBZ sees this as a positive indicator of increased utilisation and trust in the local currency.
Beyond monetary controls, the central bank pointed to broader economic strengthening, underpinned by consistent foreign currency inflows that continue to exceed external payment demands. From January to May 2025, Zimbabwe recorded average monthly foreign currency receipts of US$1.2 billion, outpacing payments of approximately US$821 million. This has produced an average monthly surplus of US$378 million, contributing to a rise in reserves and providing liquidity for domestic economic activity.
The ZiG has maintained relative stability against the US dollar, with the interbank rate closing June at ZiG26.95 to US$1. The RBZ attributed this steadiness to increased foreign currency availability in formal channels, which has also helped narrow the premium between official and parallel market rates.
The RBZ described the buildup of reserves as essential for sustaining the long-term viability of the ZiG. For the first five months of 2025, Zimbabwe recorded total foreign currency receipts of US$6 billion, a notable rise from US$4.9 billion in the same period in 2024. Export earnings were the primary source, contributing 55.9 percent of total inflows by May 2025, followed by loan proceeds at 18.4 percent and diaspora remittances at 15.4 percent.
The Reserve Bank concluded that maintaining a strong reserve position, tight money supply control, and supporting the growing use of the local currency remain central to its commitment to financial and economic stability.
The RBZ revealed that foreign reserves rose to US$731 million in June, up from US$639 million in May and a significant jump from US$276 million in April last year, when the ZiG was introduced. The ZiG, launched in April 2024 to replace the hyperinflation-stricken Zimbabwe dollar, was initially anchored by US$100 million in cash and 2,522 kilogrammes of gold worth US$185 million. The aim was to establish a stable and predictable monetary system by tying the currency to tangible assets.
In its second-quarter monetary policy update, the RBZ stated that the growth of the local currency component of reserve money remains under firm control. It reiterated that the reserve money growth strategy aligns with its target to bring annual inflation down to below 30 percent by December 2025. The bank said this restraint is central to achieving macroeconomic stability.
The RBZ also highlighted growing use of the ZiG in domestic transactions as a sign of increasing public confidence. Data from the National Payments System indicated that local currency transactions reached 43 percent in May 2025, up from 32 percent in April, before easing slightly to 35 percent in June. Despite the dip, the overall trend pointed to a rising acceptance of the ZiG, which authorities attribute to continued efforts to improve its circulation, including the wider availability of notes, coins, and Point-of-Sale (POS) machines.
The central bank emphasised that it remains watchful over the expansion of ZiG within the broader money supply. Preliminary data for June showed a slower month-on-month growth of 7.4 percent, compared to 16 percent recorded in May 2024. According to the RBZ, this moderation is consistent with broader economic growth expectations and efforts to preserve exchange rate stability.
Beyond monetary controls, the central bank pointed to broader economic strengthening, underpinned by consistent foreign currency inflows that continue to exceed external payment demands. From January to May 2025, Zimbabwe recorded average monthly foreign currency receipts of US$1.2 billion, outpacing payments of approximately US$821 million. This has produced an average monthly surplus of US$378 million, contributing to a rise in reserves and providing liquidity for domestic economic activity.
The ZiG has maintained relative stability against the US dollar, with the interbank rate closing June at ZiG26.95 to US$1. The RBZ attributed this steadiness to increased foreign currency availability in formal channels, which has also helped narrow the premium between official and parallel market rates.
The RBZ described the buildup of reserves as essential for sustaining the long-term viability of the ZiG. For the first five months of 2025, Zimbabwe recorded total foreign currency receipts of US$6 billion, a notable rise from US$4.9 billion in the same period in 2024. Export earnings were the primary source, contributing 55.9 percent of total inflows by May 2025, followed by loan proceeds at 18.4 percent and diaspora remittances at 15.4 percent.
The Reserve Bank concluded that maintaining a strong reserve position, tight money supply control, and supporting the growing use of the local currency remain central to its commitment to financial and economic stability.
Source - The Herald
