Online Reporter
Wallace Ruzvidzo
Herald Reporter
THE current devaluation wave of the US dollar, coupled with record-high gold prices, serve as powerful economic drivers for commodity-dependent developing nations like Zimbabwe, analysts have said.
They have noted that this trend will not only enhance the country’s export revenues, but will also strengthen the gold-backed ZiG currency, contributing to economic stabilisation.
Amid rising geopolitical tensions, investors are piling into the safe-haven of gold with the bullion yesterday surging past US$5 500 an ounce, extending an extraordinary rally that has seen the precious metal gain more than 20 percent in value since the start of the year.
The milestone marked the latest achievement in an extraordinary run for gold, with its price surging nearly 90 percent since United States President Donald Trump’s inauguration in January last year.
In Zimbabwe, gold is the leading export and mining contributes over 60 percent of the country’s foreign currency earnings.
As gold prices soar, this presents a promising opportunity for Government to increase revenue through a newly revised royalty structure. Initially, there was industry pushback against a proposed royalty hike to 10 percent for gold priced over US$2 500 per ounce.
In response, Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube introduced a tiered system in the 2026 National Budget. “The tiered royalty structure outlines 3 percent for gold sold under US$1 200, 5 percent for prices between US$1 201 and US$5 000, and 10 percent for prices over US$5 000,” Minister Ncube said.
As gold prices are now consistently above these thresholds, Government is poised to earn more from large-scale miners, while artisanal and small-scale miners continue to pay a lower rate of 2 percent. Minister Ncube said the move was to ensure the mining sector contributes a fair share of revenue to the fiscus during periods of commodity price boom, and to eliminate arbitrage between categories of miners.
With projections suggesting that gold prices may reach or exceed US$6 000 this year, the country’s royalty revenues could increase by hundreds of millions of dollars. This boost in income supports Zimbabwe’s goal of achieving upper-middle-class economic status by 2030.
Economic analyst Mr Persistence Gwanyanya said the devaluation of the US dollar and rise in the prices of gold automatically means the appreciation of the ZiG. “This is confirmed by the recent inflation statistics that have shown 4,1 percent for January, with projections of a 5 percent average inflation target now firmly supported,” he said. “The Zimbabwean economy has always been susceptible to external factors, hence the depreciation supports ZiG’s prospects, especially for us, where the appetite for ZiG was very high and needed to be diluted,” Mr Gwanyanya added.
He forecast that if the trend persists, it will see a decrease in the reliance on the US dollar, not only in Zimbabwe but globally.
“We want that dominance of the US dollar in Zimbabwe to be reduced from more than 95 percent where it currently stands,” Mr Gwanyanya said.
“But we see the global economy is now rethinking the United States dollar as a reserve currency. Gold will now be preferred as an alternative. It means that we even benefit from the depreciation in our exports,” he said.
Harare-based business and economic analyst Gladys Mutsopotsi said Zimbabwe stands to benefit considerably from higher nominal export earnings, especially from gold.
“This provides relief to the fiscus, improves foreign currency availability and supports mining sector cash flows,” she said.
“Over the medium term, the real benefit will depend on whether these gains are preserved through disciplined macroeconomic management,” Ms Mutsopotsi added.
She, however, said the weakening of the US dollar has mixed consequences.
On one hand, she noted that the weaker US dollar supports higher gold prices, which indirectly boosts Zimbabwe’s export earnings and reserve valuation.
On the other hand, the declining global purchasing power of the US dollar means that Zimbabwe’s export revenues may purchase fewer imports, especially those priced in stronger currencies from Europe or Asia.
“For ZiG performance, a softer USD can temporarily ease exchange-rate pressures if domestic liquidity is tightly managed,” Ms Mutsopotsi said.
“However, Zimbabwe’s exchange-rate dynamics are ultimately driven more by local fundamentals, fiscal discipline, money supply control, confidence and FX market credibility — than by global currency movements alone,” she added.
Another economic commentator, Mr Malone Gwadu, said Zimbabwe is at an advantage which will see its economy grow and local currency stabilise.
“Obviously, the softening of a hard currency, which is the US dollar, on the international market has an advantage to developing and emerging economies in the sense that their purchasing power is enhanced and by derivation their export capability is also increased,” he said.
“In particular, it is Zimbabwe where we have got the ZiG, which is largely anchored by gold and also counts on foreign currency generation earnings,” Mr Gwadu added.
Economist Daisy Huni weighed in, saying the increased gold prices will help buffer the country’s foreign reserves, supporting the ZiG from the impact of the depreciating US dollar.
However, she said, there is need for policy interventions to attract foreign investments in the country’s mining sector.
“This trend is bound to keep the Zimbabwean gold industry attractive for FDIs,” Ms Huni said.
Great news indeed.Let us see this in better national roads, better access to water and electricity and better care in our public hospitals.It cant just be in cars for MaShefu and Generals