• ZiG posts strongest annual performance in 25 years with only 2% YTD depreciation and parallel premium compressed to a manageable 30%
  • RBZ maintains ultra-hawkish 35% policy rate despite inflation cooling to 17%, reflecting persistent confidence deficit and deliberate suppression of ZiG liquidity
  • Corporate reality clashes with official narrative as many reports 90% USD sales while RBZ claims >60% ZiG transaction share

                         

Harare- The Zimbabwe Gold (ZiG) concluded the trading week on a firmer footing, appreciating marginally to an official mid-rate of ZiG26.1384 per US$ as of 5 December 2025, from ZiG26.1384 recorded the previous week. The unit kicked off December on a constructive note, opening at ZiG26.1501, thereby extending its remarkable streak of exchange-rate stability.

With only a handful of calendar days remaining in 2025, the ZiG is on course to deliver the strongest annual performance for a Zimbabwean currency in a quarter-century, posting a modest year-to-date depreciation of just -1.5%. On the parallel market, the premium has compressed to a relatively benign 30%, with the unofficial rate reflecting a more pronounced year-to-date weakening of approximately -19%. 

The narrowing parallel-market premium has materially curtailed arbitrage opportunities and reduced the implicit tax on exporters, who remain obliged to liquidate a portion of foreign-currency earnings into ZiG at the official rate. This week, the Monetary Policy Committee elected to leave the benchmark policy rate unchanged at 35%, a level it has anchored for the past fourteen months.

With headline inflation having moderated to 17% in November, the sustained wide positive real interest rate of circa 1,800 basis points signals that the monetary authorities continue to adopt a hawkish stance, reflecting lingering concerns over the durability of ZiG confidence and potential upside risks to price stability.

 Market dynamics reveal persistent excess demand for local currency relative to supply, as evidenced by acute ZiG liquidity shortages in the interbank and retail segments.

The supply constraint remains entirely discretionary and under the direct control of the Reserve Bank of Zimbabwe (RBZ). Any aggressive easing of liquidity conditions carries the material risk of triggering a sharp currency depreciation spiral, particularly in an environment where speculative positioning continues to exert considerable influence on valuation. 

Fiscal arrears to domestic suppliers have now ballooned beyond US$1 billion and continue to accrue, creating a significant contingent liability. Sudden settlement of even a fraction of these obligations in ZiG could flood the market with unwanted local-currency liquidity, precipitating volatility and undermining confidence. This overhang constitutes a primary rationale for the RBZ’s cautious approach to money-supply expansion while the arrears gap persists.

Corporate reporting provides a sobering counterpoint to official narratives. Delta Corporation, the country’s largest listed entity by market capitalisation, disclosed that nearly 90% of its half-year sales to September 2025 were denominated and settled in US dollars.

In contrast, the central bank insists that ZiG utilisation has broadened markedly over the past six months. With inflation now on a clear disinflationary path, orthodoxy would prescribe a calibrated reduction in the policy rate to narrow the real rate differential, stimulate credit creation, boost aggregate demand, and facilitate a virtuous increase in willingly held ZiG balances. 

The 2026 National Budget projects foreign-exchange inflows in excess of US$15 billion, predominantly driven by mineral exports and diaspora remittances, a substantial uplift from prior-year actuals, underpinned by buoyant gold and platinum-group-metal prices. Gold has surged approximately 60% year-on-year, while PGMs have reclaimed levels close to historic peaks.

Heightened global dollar risk aversion in the wake of shifting trade dynamics and policy uncertainty following the U.S. election has further amplified commodity price tailwinds. These developments have translated into export receipts more than 50% above prior-year levels for Zimbabwe’s two largest hard-currency earners, providing critical support to official forex reserves and, by extension, bolstering ZiG stability. 

Notwithstanding the impressive headline exchange-rate performance, broad-money aggregates suggest that physical ZiG liquidity remains extraordinarily scarce. True currency stability is ultimately measured by the quantum of willingly held local-currency balances rather than velocity of circulation under duress. The RBZ’s claim that ZiG now accounts for over 60% of transactional volume awaits independent verification, given its apparent divergence from granular corporate disclosures.

Real-sector gains are unequivocally concentrated in the extractive industries, with gold output poised for a record annual outturn. Businesses are advised to adopt a cautiously optimistic posture toward the ZiG. Zimbabwe’s protracted history of monetary mismanagement and repeated currency collapses constitutes a non-trivial legacy risk that cannot be summarily dismissed.

Primary near-term concerns centre on the escalating stock of payment arrears exceeding US$1 billion and the crowding-out effects stemming from an infrastructure financing model reliant on punitively expensive domestic-currency borrowing. Recent public finance data reveal capital expenditure already running 100% above budget, while health-sector disbursement languishes at under 30% of allocation.

Deferred supplier payments themselves impose a hidden fiscal cost, as contractors embed substantial risk premia and time-value adjustments into bids, ultimately inflating project costs to unsustainable levels.

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