• ZiG Stability Persists: Backed by USD 900M in reserves and disciplined RBZ monetary policy, ZiG is maintaining stability
• Gold and Tobacco Boost Liquidity: Record gold prices (USD 4,000/kg, up 60% YTD) and strong tobacco exports enhancing USD liquidity
• Fiscal Risks Threaten Outlook: Unresolved contractor and exporter payment arrears, coupled with limited fiscal headroom, pose risks to ZiG stability

Harare – The Zimbabwe Gold (ZiG), backed by reserves estimated at USD 900 million by the Reserve Bank of Zimbabwe (RBZ), has maintained a stable exchange rate, marking over a year of resilience since the September 2024 devaluation. This stability is largely attributed to the RBZ’s disciplined monetary policy framework, which has restored order to the forex market.

Record-high gold prices, reaching USD 458 million in July and USD 467.2 million in August, have bolstered USD liquidity, narrowing the parallel market premium. Coupled with a tight ZiG liquidity environment, driven by 35% borrowing rates and robust USD inflows from gold and tobacco exports, exporters have been spared the currency losses previously incurred under the RBZ’s export surrender regime.

Historically, exporters were mandated to surrender 30% of their earnings in overvalued ZiG, forcing them to the parallel market to secure USD at premiums exceeding 50%. For instance, relinquishing USD 20 million at an overvalued official rate and repurchasing USD on the black market at a 50% premium resulted in losses of at least 25% of their revenue.

However, increased monetary discipline and USD liquidity from have reduced the parallel market premium to below 26% as of October 20, 2025, benefiting exporters and supporting broader economic stability, including inflation control.

Last week on the 17^th of October 2025, the ZiG closed at 1:26.6 on the Willing-Buyer Willing-Seller (WBWS) market, reflecting a 0.3% appreciation week-on-week. Year-to-date, the ZiG has remained robust, depreciating only 3.1% against the USD.

Global uncertainties, including geopolitical tensions in the Middle East and Eastern Europe, trade tariffs, and shifts in the global economic order since the onset of Trump’s term, have weakened the USD. The U.S. faces mounting debt and a tighter monetary policy, dampening USD demand in 2025.

Against this backdrop, risk aversion has driven international gold prices to a record USD 4,000 per kg, a 60% year-to-date increase, bolstering Zimbabwe’s forex earnings, as gold accounts for over 35% of total export receipts.

However, concerns persist over delayed payments to miners under the 30% export surrender requirement, though gold exporters report timely settlements, unlike platinum group metals (PGM) exporters and contractors. Major mining firms confirm prompt payments and benefits from a stable ZiG.

In our prior forex review, we cautioned that currency stability remains precarious. Addressing overdue payments to contractors and export retention obligations is critical to sustaining exchange rate stability. Unresolved, these could precipitate another significant devaluation.

Fiscal space to clear these arrears without risking short- or medium-term instability is limited. While efforts to formalise the informal sector are yielding revenue gains, they are insufficient to significantly enhance fiscal earnings over the next five years. Strong commodity export performance supports currency stability but falls short of creating sufficient fiscal headroom for expenditure.

The government may consider scaling back new and ongoing capital projects to redirect funds toward settling arrears. However, it is more likely to defer these obligations, banking on future external funding or an unexpected economic windfall, though such a strategy carries risks if delays persist or no fiscal miracle materialises.