'ZiG now better than US$'

The Reserve Bank of Zimbabwe (RBZ) has acknowledged growing anxiety within the business community over proposed plans to transition from the United States dollar to a ZiG mono-currency system, but insists the move is essential for long-term economic stability.

RBZ Governor Dr John Mushayavanhu said while concerns were understandable given Zimbabwe's turbulent currency history, authorities were confident the foundations for a stable domestic currency were now firmly in place.

Government introduced the Zimbabwe Gold (ZiG) currency in April 2024, the latest in a series of currency reforms since the economy was dollarised in 2009 following record hyperinflation.

Authorities are now proposing to establish the ZiG as the primary legal tender, ending years of reliance on the US dollar as the dominant medium of exchange.

The proposal has unsettled some businesses still scarred by past currency collapses. However, speaking on Mushayavanhu's behalf at a 2025 Economic Review and 2026 Outlook meeting in Bulawayo, RBZ Deputy Governor Innocent Matshe said there was no cause for alarm.

Mushayavanhu said the shift to a domestic currency was the cornerstone of lasting financial stability, arguing that the ZiG was already delivering key economic fundamentals.

"You are safer saving in ZiG than in USD," Mushayavanhu said.

"Single-digit inflation means a return to enduring stability. Month-on-month ZiG inflation has averaged around 0,3% since February 2025, reflecting sustained price stability."

He said annual ZiG inflation had declined sharply from a peak of 95,8% in July 2025 to 4,1% in January 2026, adding that the central bank would continue implementing prudent monetary policies to preserve the trend.

Addressing fears that a mono-currency system could threaten foreign currency savings, Mushayavanhu assured the banking public that US dollar deposits would remain secure.

"They will keep them and still make use of them," he said.

The RBZ governor said the ZiG's stability was being underpinned by a strengthening reserve position, with foreign currency reserves rising to US$1,2 billion by December 2025.

This level, he said, was sufficient to cover about six times the stock of ZiG reserve money and roughly double ZiG deposits.

"The build-up of foreign currency reserves is critical for the lasting stability of ZiG," Matshe said.

He also highlighted growth in the country's foreign currency generation capacity, which rose by 21,8% to US$16,2 billion in 2025, up from US$13,3 billion in 2024.

"Export earnings dominated the basket, averaging 59,7% of total foreign currency receipts in 2025, followed by loan proceeds at 14,8% and diaspora remittances at 13,5%," Matshe said.

The RBZ projects further growth in 2026, driven by improved prices for key export minerals and rising diaspora remittances.

According to the central bank, the ZiG exchange rate has remained largely stable against the US dollar, averaging 26,61, while the parallel market premium was contained below 20% for most of the year.

This stability was supported by foreign exchange market interventions amounting to US$1,34 billion since April 2024.

Government has said the ZiG is backed by gold and a basket of other precious minerals, and was introduced to replace the Zimbabwe dollar, which rapidly lost value after its reintroduction in 2019 under President Emmerson Mnangagwa's de-dollarisation drive.

Economic analyst and Africa Economic Development Strategies executive director Mr Gift Mugano said the surge in global gold prices was strengthening Zimbabwe's external position.

"Gold traditionally constitutes 53% of mineral exports and 48% of total exports," Mugano said.

"The surge in gold prices has immense benefits for Zimbabwe in terms of increased export revenue, which will dilute potential losses from declining prices of base metals like platinum and nickel."