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New ZiG notes trigger exchange rate spikes
3 hrs ago |
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The Reserve Bank of Zimbabwe (RBZ) on Tuesday released a new series of local currency banknotes aimed at improving market liquidity, but the move immediately triggered turbulence on the parallel market, raising fresh fears of inflationary pressure.
The rollout saw the Zimbabwe Gold (ZiG) exchange rate weaken sharply from a relatively stable ZiG26 to the United States dollar to around ZiG40, coinciding with the entry of the new notes into circulation.
The ZiG, introduced in April 2024, had been backed by tight monetary controls, helping the central bank rein in inflation to single digits. Annual inflation stood at 4.1% in January 2026 - the first time in 27 years Zimbabwe achieved such stability.
However, Tuesday's sudden depreciation has unsettled markets, with analysts warning that increased liquidity could undermine recent gains if not carefully managed.
Announcing the rollout, RBZ governor John Mushayavanhu said the move followed a nationwide awareness campaign conducted from March 1 to 31.
"The issuance and circulation of the new series of ZiG banknotes was preceded by a successful nationwide educational and awareness campaign, during which the rollout plan was comprehensively articulated," he said.
Mushayavanhu added that the central bank, in collaboration with commercial banks, had put in place adequate logistical arrangements to ensure a smooth distribution of the upgraded BiG5 ZiG banknotes.
"The new BiG5 ZiG banknote series has since been distributed countrywide in sufficient quantities to meet anticipated cash demand, consistent with stipulated daily and weekly withdrawal limits," he said.
The rollout will be phased, beginning with ZiG10 and ZiG20 notes, alongside the introduction of a new ZiG50 denomination from April 7, 2026. Higher denominations - ZiG100 and ZiG200 - will be introduced gradually, guided by transactional demand and prevailing monetary conditions.
The RBZ also confirmed that ZiG coins - first introduced in April 2024 - have been reissued in adequate quantities, including ZiG1, ZiG2 and ZiG5, to facilitate low-value transactions and reduce pressure on smaller notes.
Authorities said both old and new ZiG banknotes will co-circulate indefinitely, with the older series expected to be phased out naturally as they are returned through the banking system.
Despite assurances, the sharp parallel market reaction underscores lingering fragility in Zimbabwe's currency system, with market confidence remaining highly sensitive to shifts in money supply.
The rollout saw the Zimbabwe Gold (ZiG) exchange rate weaken sharply from a relatively stable ZiG26 to the United States dollar to around ZiG40, coinciding with the entry of the new notes into circulation.
The ZiG, introduced in April 2024, had been backed by tight monetary controls, helping the central bank rein in inflation to single digits. Annual inflation stood at 4.1% in January 2026 - the first time in 27 years Zimbabwe achieved such stability.
However, Tuesday's sudden depreciation has unsettled markets, with analysts warning that increased liquidity could undermine recent gains if not carefully managed.
Announcing the rollout, RBZ governor John Mushayavanhu said the move followed a nationwide awareness campaign conducted from March 1 to 31.
"The issuance and circulation of the new series of ZiG banknotes was preceded by a successful nationwide educational and awareness campaign, during which the rollout plan was comprehensively articulated," he said.
Mushayavanhu added that the central bank, in collaboration with commercial banks, had put in place adequate logistical arrangements to ensure a smooth distribution of the upgraded BiG5 ZiG banknotes.
"The new BiG5 ZiG banknote series has since been distributed countrywide in sufficient quantities to meet anticipated cash demand, consistent with stipulated daily and weekly withdrawal limits," he said.
The rollout will be phased, beginning with ZiG10 and ZiG20 notes, alongside the introduction of a new ZiG50 denomination from April 7, 2026. Higher denominations - ZiG100 and ZiG200 - will be introduced gradually, guided by transactional demand and prevailing monetary conditions.
The RBZ also confirmed that ZiG coins - first introduced in April 2024 - have been reissued in adequate quantities, including ZiG1, ZiG2 and ZiG5, to facilitate low-value transactions and reduce pressure on smaller notes.
Authorities said both old and new ZiG banknotes will co-circulate indefinitely, with the older series expected to be phased out naturally as they are returned through the banking system.
Despite assurances, the sharp parallel market reaction underscores lingering fragility in Zimbabwe's currency system, with market confidence remaining highly sensitive to shifts in money supply.
Source - newsday
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