• Zimbabwe Gold (ZiG) showed minimal depreciation of only 0.01% over 7 months, outperforming the Zimbabwe Dollar’s 80% plunge, but this stability is artificially propped up by delayed payments to exporters and contractors.
• Unpaid obligations, including over 5 billion ZiG to PGM exporters and over $1 billion USD equivalent to contractors, create an artificial ZiG scarcity
• Despite the RBZ’s 2030 de-dollarisation goal, 90% of transactions (including the informal sector) are USD-dominated

Harare- In the week to 25 August 2025, the Zimbabwe Gold (ZiG) exhibited remarkable stability, experiencing a marginal depreciation of 0.02%, moving from an exchange rate of 26.7683 on August 19, 2025, to 26.7624 on August 25, 2025.

This steadfast performance reflects the ZiG’s robust trajectory since its inception, marking a significant milestone in Zimbabwe’s monetary history.

Over the 25 days of August, the ZiG recorded a modest depreciation of 0.11%, a big contrast to the Zimbabwe Dollar (ZWL), which plummeted by 80% in the four months leading to April 2025.

Comparatively, the ZiG’s cumulative decline over seven months to August 2025 was a negligible 0.01%, cementing its position as the best-performing currency in Zimbabwe’s history.

The monetary policy landscape under Governor John Mushayavanhu has been marked by a complex balance of discipline and challenges. Unlike the stringent controls initially anticipated, Mushayavanhu’s tenure saw a significant spike in money printing during preparations for the 2024 SADC summit, which led to a 43% devaluation of the ZiG in September 2024, echoing the monetary indiscipline observed under his predecessor, John Mangudya.

Mangudya’s era was characterized by aggressive money creation to finance budget deficits and public spending, contributing to severe currency devaluation.

However, post-SADC, Mushayavanhu has adopted a more disciplined approach, heavily relying on deferring payments, including export surrender portions and Treasury obligations for national projects, to constrain liquidity and bolster the ZiG’s stability.

Platinum group metals (PGM) exporters have not received their 30% export surrender equivalent in ZiG since January 2025, despite exporting $690 million in value, resulting in government arrears exceeding 5 billion ZiG at the prevailing rate of 26.8.

Similarly, contractors such as Masimba and Bitumen World have faced delayed payments, with the latter announcing staff downsizing.

This deliberate withholding of payments has created an artificial scarcity of ZiG, bolstering its value on the formal market and anchoring the parallel market rate at 34–36 since May 2025, down from 38 earlier in the year.

However, this firming is deceptive, as it is not driven by organic market forces of supply and demand but rather by government-induced liquidity constraints.

Should a significant portion of these deferred payments be released, the market’s limited absorptive capacity could trigger a sharp increase in ZiG liquidity, potentially destabilizing the currency.

The government’s strategy of backtracking on obligations, while effective in maintaining short-term stability, poses significant risks to exporters, suppliers, and the broader economy, potentially undermining confidence in the ZiG.

The Reserve Bank of Zimbabwe (RBZ) has outlined an ambitious plan in its 2025 Mid-Term Monetary Policy Statement (MPS) to achieve full de-dollarisation by 2030, predicated on the ZiG’s perceived stability.

However, transactional data reveals a significant challenge: 60% of transactions processed through the National Payments System are conducted in USD, with the remaining 40% in ZiG.

When factoring in the informal sector, which accounts for approximately 70% of commerce, the USD’s dominance swells to an estimated 90% of total transactions. This heavy skew toward dollarisation, coupled with the RBZ’s tight monetary policy stance and resultant liquidity squeeze, casts doubt on the central bank’s assertion of the ZiG’s fundamental stability.

High benchmark interest rates, maintained despite moderating inflation, further signal underlying concerns about potential volatility, acting as a brake on economic growth while reflecting a lack of confidence in the currency’s resilience.

The government’s positive outlook hinges on continued monetary and fiscal discipline, bolstered by a favourable current account balance and growing foreign exchange reserves, which provide a foundation for near-term ZiG/USD exchange rate stability.

Policies such as the 50:50 ZiG-USD split for Quarterly Payment Dates (QPDs) aim to stimulate demand for the local currency, potentially reducing reliance on the parallel market.

However, these optimistic projections are tempered by significant risks. The non-payment of key suppliers, including exporters and contractors, has led to a buildup of domestic arrears, with Treasury estimates suggesting obligations exceeding $1 billion USD.

A sudden settlement of these arrears could flood the market with ZiG, fueling inflationary pressures and eroding confidence in the currency.

Moreover, underutilisation of the budget by government ministries signals inefficiencies in fiscal management, potentially necessitating future money printing to meet obligations a move that could further destabilize the ZiG.

Therefore, while the ZiG has demonstrated unprecedented stability in Zimbabwe’s volatile currency history, its firmness is precariously underpinned by artificial liquidity constraints rather than genuine market-driven demand.

The government’s strategy of deferring payments has temporarily fortified the ZiG but at the cost of straining critical economic stakeholders, including exporters and contractors. The RBZ’s aspirations for de-dollarisation by 2030 face formidable challenges given the USD’s dominance in transactions and the informal sector’s outsized role.

The trajectory of the ZiG’s stability will hinge on the government’s ability to balance its fiscal and monetary commitments while fostering genuine demand for the local currency. Failure to address these structural vulnerabilities could precipitate a sharp depreciation, undermining the hard-won gains of the ZiG and the broader economic stability it seeks to anchor.

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