Business Reporter
Zimbabwe’s gold-backed currency, ZiG, has completed its longest period of stability since being launched in April last year, increasing confidence about prospects for prolonged price stability, improved investor confidence and a recovery in household spending power.
Analysts and business leaders say the steady exchange rate has started to reduce inflationary pressures and encourage transactions in the local currency, dissipating scepticism over whether the stability would last.
The new currency has held its ground, putting into the distant past the memory of Zimbabwe’s troubled past, when inflation inflation in July 2008 climbed to its highest level, wiping out all the local currency savings in the process.
Zimbabwe had not experienced any prolonged currency stability between February 2019, when the local unit was reintroduced and April 2024, when the ZiG was launched.
The Zimbabwe dollar experienced significant devaluation and depreciation since its relaunch in 2019, following a hyperinflation-induced 10-year hiatus, leading to reduced confidence and a widespread reliance on the US dollar for transactions.
But the picture has changed.
Monthly inflation in Zimbabwe has mostly been declining since February 2025 due to sustained tight monetary and fiscal policies and the stability of the ZiG currency.
Business leaders, economic analysts, and authorities have been paying the most attention to the trajectory of monthly inflation, as its computation over a given year-long period determines the annual rate.
The low inflation, even dropping to negative rates, has averaged around 0,5 percent to 0,6 percent from February to July 2025.
Zimbabwe’s monthly inflation rate is projected to average below 3 percent for the remainder of the year, according to the Reserve Bank, and potentially revert to the low levels seen between February and July 2025.
The prolonged local currency stability has seen the gap between the official exchange rate and the parallel market rate, which affects local currency prices, falling from 100 percent at one point to around 26 percent.
The central bank forecasts annual inflation to fall below 30 percent by the end of 2025, following a temporary peak in September 2025 due to a base effect from 2024 price increases.
For the ordinary Zimbabwean, whose incomes were often eroded by persistent currency swings, the positive impact of the more stable ZiG is already being felt through prolonged price stability and other essentials such as public transport fares.
“Predictable exchange rates make it easier for people to plan purchases and avoid panic buying,” said Gladys Shumbambiri-Mutsopotsi, an economist. “Stability reduces the need for traders to charge extra to cover risks, and that helps to protect household budgets,” she said.
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