Online Reporter
Debra Matabvu and Nelson Gahadza
THE Reserve Bank of Zimbabwe (RBZ)’s adoption of a market-determined exchange rate system has opened a new chapter of stability for the Zimbabwe Gold (ZiG) currency.
With the removal of exchange rate controls through Statutory Instrument (SI) 34 of 2025, prices have maintained their equilibrium, and ZiG has stepped into a brighter phase of sustained value and robustness.
Large supermarkets have maintained their exchange rates, following the implementation of the SI.
Leading retailers TM Pick & Pay and OK Zimbabwe have kept their rates at US$1:ZiG32 and US$1:ZiG31,95, respectively, showing no signs of major fluctuations.
The SI, which repealed the previous law binding businesses to the official exchange rate for pricing purposes, was initially met with concerns of possible price hikes.
However, these fears have proven to be unfounded, as price stability has been maintained in the aftermath of the new regulation.
The law prohibiting businesses from using exchange rates higher than the RBZ’s average interbank foreign currency selling rate, which was enacted in May 2024, was repealed in March 2025, paving the way for a more flexible pricing system.
This shift in legislation comes amidst an encouraging trend in Zimbabwe’s foreign currency reserves, which have seen a steady climb from US$285 million in April 2024 to US$629 million by the end of March this year.
RBZ Governor Dr John Mushayavanhu attributed the significant growth of the country’s foreign currency reserves to three key factors: tighter monetary policies; increased foreign currency inflows; and an elevated export surrender requirement, raised from 25 percent to 30 percent.
“The ZiG exchange rate has remained stable since the announcement of SI 34 of 2025, around ZiG26,8 per US dollar,” said Dr Mushayavanhu.
“In addition, the parallel market exchange rate has also remained stable, with the premium contained below 20 percent.
“The exchange rate is expected to remain stable, anchored on the current tight monetary stance underpinned by optimal money supply growth and a robust foreign currency reserve accumulation strategy.
“As alluded to above, the exchange rate has remained relatively stable. The current monetary policy stance, coupled with increased foreign currency inflows and accumulation in foreign currency reserves, has resulted in continued stability in the foreign exchange market.”
Dr Mushayavanhu said the central bank will continue to intervene in the market whenever an exchange rate shock arises.
“Currently, the Reserve Bank has increased the export surrender requirement from 25 percent to 30 percent,” said Dr Mushayavanhu.
“This has allowed the Reserve Bank to accumulate foreign currency reserves and increase buffers needed for strategic intervention in the foreign exchange market.”
Dr Mushayavanhu said the parallel market exchange rate was driven largely by speculative behaviour and was not reflective of true market fundamentals.
The bank’s monetary tools, which include open market operations, statutory reserves and a tight interest rate regime, he said, helped suppress arbitrage and speculative activity.
“The Reserve Bank has various open market instruments in its Monetary Policy tool kit to ensure continued stability in the foreign exchange market,” he said.
“Precisely, the Reserve Bank strategically intervenes in the foreign exchange market to ensure that the market clears and all bona fide foreign invoices are met.
“In addition, the Reserve Bank has been pursuing a robust foreign currency reserve accumulation strategy, which has resulted in reserves increasing from US$285 million as at April 5, 2024, to US$629 million by the end of March 2025.”
Dr Mushayavanhu said foreign currency reserves were critical to sustain stability in the foreign exchange market.
“Stability conditions currently prevailing in the formal foreign exchange market have curtailed activity on the parallel market and contained the exchange rate premium to below 20 percent,” he said.
“Since the recalibration of the Monetary Policy on April 5, 2024, the Reserve Bank has been operating a market-determined exchange rate based on the willing-buyer-willing-seller system.
“The market-determined exchange rate has led to increased stability in inflation since the launch of the ZiG in April 2024.”
Monthly inflation, Dr Mushayavanhu added, had been low and stood at 0,6 percent in April, up from -0,1 percent in March 2025.
“The Reserve Bank and Government will continue to refine and deepen the foreign exchange market to enhance its operational efficiency and engender long-term price, currency and financial sector stability,” he said.
He said the Reserve Bank will continue to maintain optimum liquidity in the market to restrict speculative activities.
In addition, the interest rate policy is set to discourage arbitrage and speculative activities.
“Importantly, the Reserve Bank continues to utilise the bank policy rate, Open Market Operations (OMO) and statutory reserves to ensure an appropriate monetary policy stance supportive of the stable exchange rate,” he said.
“New monetary policy tools will be introduced in line with monetary and financial developments in the economy.”
Confederation of Zimbabwe Retailers (CZR) president Dr Denford Mutashu told The Sunday Mail that the stability in ZiG prices and the exchange rate could be attributed to RBZ’s commitment to a tight monetary policy framework.
“By controlling money supply growth and anchoring the ZiG to a basket of reserves backed by gold and foreign currency, the central bank has managed to curb inflationary expectations and reduce speculative activity,” he said.
Bongani Ndlovu