• ZiG Exchange Rate: ZiG has firmed to an exchange rate of 26.7724 today 🌟
• Temporary Stability: Current stability is driven by tighter liquidity, disciplined fiscal policies, and reduced speculative demand 📊
• External Threat: A 30% US tariff on South African exports poses a risk to Zimbabwe's trade balance 🚨

Harare- The Zimbabwe Gold (ZiG) has reached an exchange rate of 26.7724 today, continuing a period of relative calm that began in early June 2025.

This stability in both the official and parallel markets is a significant departure from Zimbabwe’s history of economic volatility, offering a cautiously optimistic development.

Unlike its predecessors the ZiG, RTGS, and ZWL which suffered annual depreciation rates exceeding 80%, the current ZiG has depreciated by 49% since its launch, marking it as the most robust currency in Zimbabwe’s history.

Despite this progress, a persistent disparity between the official and parallel market rates highlights unresolved structural challenges within the economy.

The current stability in both markets is driven by tighter liquidity, more disciplined fiscal policies, and a temporary reduction in speculative demand.

In the official market, the Reserve Bank of Zimbabwe (RBZ) has implemented a willing buyer, willing seller system and restricted reserve money growth to mitigate upward pressure on the exchange rate.

In the parallel market, foreign currency availability has slightly improved due to mid-year tobacco exports and a slowdown in public sector capital spending, which previously fuelled USD demand.

This has created an uneasy equilibrium, not a true resolution or convergence, but a temporary pause in volatility across both markets.

However, this fragile balance is threatened by a 30% U.S. tariff on South African exports. South Africa is not only Zimbabwe’s largest trading partner but also its primary conduit for global trade, handling exports like gold, platinum, chrome, nickel, and tobacco through its transport, logistics, and financial systems.

Similarly, Zimbabwe’s imports ranging from fuel and foodstuffs to pharmaceuticals and machinery either originate in or pass through South Africa.

The stability of Zimbabwe’s trade flows depends heavily on the accessibility and reliability of South Africa’s trade infrastructure.

If South African exporters lose access to the U.S. market, they may redirect goods to neighbouring countries, including Zimbabwe, potentially flooding the local market with cheaper consumer goods, particularly in retail and fast-moving consumables.

While this could provide short-term benefits, the long-term consequences are concerning.

Zimbabwe’s manufacturers and food processors, already strained by power shortages and high input costs, may struggle to compete with oversupplied South African producers, risking factory closures, job losses, and reduced domestic production.

Additionally, disruptions in South African logistics could hinder Zimbabwean exporters’ ability to reach international markets, reducing critical foreign currency inflows needed to sustain the RBZ’s currency strategy.

Increased imports from South Africa could widen Zimbabwe’s trade deficit, intensifying USD demand and testing the limits of current exchange rate stability.

A potential depreciation of the South African rand, driven by capital flight and trade disruptions, could further escalate regional USD demand, including in Zimbabwe.

Cross-border traders, informal wholesalers, and large corporations may accelerate dollar purchases to hedge against currency risk, destabilizing the parallel market and pushing the street rate higher, which could reintroduce inflation into the domestic economy.

The current exchange rate stability is not a result of resolved supply-demand imbalances but rather a temporary pause driven by tighter monetary policy, improved tax collections, and seasonal agricultural forex inflows.

These factors are cyclical, not permanent, and leave the economy vulnerable to external trade shocks and shifts in investor sentiment.

The risk is that this calm may foster a false sense of security among policymakers and market participants, despite the economy’s fragility.

Informal traders and manufacturers are already expressing concerns about supply chain disruptions and price uncertainty, signalling a potential shift in business sentiment that could soon affect currency demand.

To address these risks, Zimbabwe’s policymakers must shift from passive monitoring to proactive measures. Diversifying trade routes, such as leveraging Mozambique’s Beira corridor, finalizing trade agreements with alternative regional partners, and investing in dry ports and warehousing, could reduce reliance on South Africa.

Currency stability should be reinforced through strategic reserve accumulation, transparent central bank communication, and efforts to rebuild public trust in the ZiG, beyond relying solely on tight liquidity controls.

While both markets have remained stable this week, this calm is neither comprehensive nor guaranteed, as the gap between official and parallel rates reflects ongoing market segmentation, and deeper vulnerabilities could soon be exposed by global and regional developments.

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