ZIMBABWE’s currency environment has entered a period of relative calm that would have appeared improbable only a few years ago.
Inflation has decelerated sharply, exchange-rate volatility has moderated and speculative pressures have visibly eased.
Recent Reserve Bank of Zimbabwe (RBZ) data suggests that the introduction of the ZiG has delivered short-term stabilisation.
The more consequential question for policymakers, investors and businesses is whether this calm marks the beginning of a durable monetary regime, or merely a pause contingent on discipline holding.
Inflation dynamics provide the clearest evidence of policy traction. Annual Zimbabwe gold ZiG inflation declined from 15% at the end of 2025 to 4,1% by January 2026, achieving single-digit annual inflation for the first time in over two decades.
While annual figures can be influenced by base effects, the more relevant signal lies in month-on-month inflation, which averaged just 0,4% throughout 2025.
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This points to a genuine slowdown in price momentum rather than statistical optics, reflecting tighter liquidity conditions and improved monetary control.
Exchange-rate behaviour has reinforced these gains. Throughout 2025, the interbank ZiG/US dollar rate averaged around ZiG26, exhibiting a degree of stability rarely sustained in Zimbabwe’s recent monetary history.
More unusually, the parallel market rate declined, from peaks near ZiG40 per US dollar to an average of about ZiG31.
Consequently, the premium between official and parallel rates narrowed to roughly 20%, down from levels exceeding 140% prior to 2024.
This compression has reduced arbitrage opportunities, dampened speculative demand, and eased price distortions between formal and informal markets.
Reserve backing has played a central, though constrained, role in anchoring expectations. Foreign currency reserves rose to approximately US$1,2 billion, equivalent to about 1,5 months of import cover, well below the commonly cited international adequacy benchmark of three to six months.
While this level remains modest by International Monetary Fund and World Bank standards, it has nonetheless been sufficient to support early confidence in the ZiG under conditions of strict monetary restraint.
Markets appear willing to tolerate limited reserve depth in the short term, provided policy discipline compensates for structural constraints.
Crucially, money supply growth has been kept under check. The RBZ has exercised restraint in ZiG issuance, aligning liquidity conditions with the observed disinflation.
Supporting this stance, government has publicly committed not to borrow from the central bank, reducing the risk of monetary financing and unchecked reserve money expansion.
This fiscal–monetary alignment strengthens the credibility of reserve backing and improves the central bank’s capacity to defend the currency against shocks.
Yet these gains remain conditional rather than entrenched. Zimbabwe’s monetary history suggests that currency regimes tend to unravel not through technical design flaws, but through fiscal pressures that reintroduce central bank financing.
While reserves have improved, their limited depth leaves little margin for policy slippage should liquidity demands rise or fiscal discipline weaken.
Encouragingly, early behavioural indicators point to tentative confidence gains.
Greater convergence between official pricing and market exchange rates suggests improving transactional acceptance, while the increasing willingness of economic agents to price and transact in ZiG points to cautious adaptation.
Such confidence, however, remains inherently reversible. Currency credibility is built through repeated outcomes over time, not policy declarations or short-lived calm.
Beyond monetary and fiscal discipline, the sustainability of ZiG stability will increasingly depend on real-sector performance, particularly productivity growth and export competitiveness.
A stable currency cannot be anchored indefinitely by restraint alone; it must ultimately be supported by an economy capable of generating foreign exchange organically.
Policies that raise industrial productivity, reduce unit production costs, and expand export capacity are therefore not complementary to monetary stability, they are central to it.
Targeted support for export-oriented sectors, improved energy reliability, logistics efficiency, and predictable trade and tax regimes would strengthen external balances and reduce pressure on reserves.
Similarly, productivity-enhancing investments in manufacturing, agriculture value chains and mining beneficiation would help shift the economy from exchange-rate sensitivity toward earnings resilience.
As export receipts deepen and diversify, confidence in the ZiG would be reinforced not by defence, but by fundamentals.
For now, the data tell a cautiously optimistic story. Inflation has slowed meaningfully, exchange-rate distortions have narrowed, liquidity has been restrained, and fiscal authorities have publicly aligned with monetary stability objectives.
What could destabilise this equilibrium is already visible in the numbers: reserve adequacy, money supply discipline, fiscal conduct, and increasingly, the pace of productivity and export growth.
Whether ZiG stability evolves from a temporary achievement into a durable monetary regime will depend less on ambition than on restraint, and less on restraint alone than on the economy’s capacity to earn its stability.
Key numbers at a glance:
l Annual ZiG inflation: 15% (end-2025): 4,1% (January 2026);
l Average MoM inflation (2025): 0,4%;
l Interbank exchange rate (2025 avg): ZiG26/US$1;
l Parallel market rate (2025 avg): ZiG31/US$1;
l Official–parallel premium: ~20% (down from >140% pre-2024);
l Foreign reserves: US$1.2 billion (≈ 1.5 months import cover); and
l Policy stance: No government borrowing from RBZ; money supply growth restrained.
Mavodyo is a senior lecturer in Economics at the University of Zimbabwe and an economic policy consultant.