Zimbabwe's foreign currency reserves surge by 87%

The Reserve Bank of Zimbabwe (RBZ) has reported a significant increase in its foreign currency reserves, which have surged by 87% to reach US$550 million as of January 2025. This marks a substantial growth from the US$285 million recorded in April 2024, when the bank first launched its Zimbabwean Gold (ZWG) currency.

The surge in reserves is attributed to a combination of foreign currency and precious metals, primarily gold, which have been accumulated through mining royalties, direct currency purchases from the interbank market, and outright gold purchases. The RBZ's approach to boosting reserves has been centered on supporting the ZWG currency and ensuring stability in the country's exchange rates.

Governor John Mushayavanhu expressed confidence in the success of the strategy, noting that the growth in reserves has fully covered the total ZiG deposits in the economy, which amounts to around ZiG13 billion. This coverage, according to Mushayavanhu, plays a crucial role in supporting the bank's currency and exchange rate stability objectives.

"Our reserve accumulation strategy has been designed to ensure that, at all times, the ZiG component of reserve money is fully backed by adequate foreign currency and precious metals," said Mushayavanhu. "With the continued positive trends in foreign exchange inflows, we are optimistic that our reserve holdings will further improve as we head into 2025."

The Reserve Bank's successful accumulation of foreign currency and gold reserves has been seen as a critical step towards safeguarding the country's economy and mitigating the impact of global financial uncertainties. The growth of these reserves is expected to further stabilize Zimbabwe's local currency, with the RBZ planning to continue its focus on securing long-term economic stability.