Business Correspondent
HARARE – Zimbabwe’s gold-backed ZiG currency briefly halted its month-long depreciation streak on May 21, firming to 26.8853 against the U.S. dollar from 26.9786, before sliding again, reigniting concerns about its viability.
The currency, introduced in 2024, has lost 50% of its value since inception, including a sharp 43% devaluation in September 2024.
The Reserve Bank of Zimbabwe (RBZ) has closely guarded the 27 ZiG-per-dollar threshold, a level nearly breached during recent volatility.
“The 27 mark is a critical psychological barrier,” said economist Tendai Mupaso.
“Breaching it could trigger panic selling and further erode public trust.”
Despite a 4% depreciation in 2025—the mildest for a Zimbabwean currency in decades—analysts warn that reliance on liquidity controls, such as high interest rates and restricted money supply, is unsustainable.
“Scarcity alone can’t stabilize a currency,” cautioned Mupaso.
“Without organic demand, the ZiG remains vulnerable.”
To bolster demand, experts propose mandating all taxes, royalties, and fees be paid exclusively in ZiG, up from the current 50%. This approach previously stabilized the Zimbabwe dollar in 2022 under former RBZ Governor John Mangudya.
“Full ZiG tax compliance would create consistent demand,” said Harare-based economist Grace Nyoni.
“But past gains were undone by liquidity injections—this time, structural reforms must anchor confidence.”
The RBZ faces mounting pressure to reduce dollar dominance in daily transactions. Statutory Instrument 34 of 2025, which enabled market-driven pricing, aims to rebuild trust.
“SI 34 is a step toward normalizing the ZiG,” said government spokesperson Fadzai Murombedzi.
“But businesses and citizens need assurance that policies won’t abruptly reverse.”
Comparisons to Venezuela and Argentina underscore the risks of half-measures. Caracas’ Petro-backed bolivar and Buenos Aires’ serial currency resets collapsed amid fiscal deficits and distrust.
“ZiG’s gold reserves offer a firmer foundation, but discipline is key,” noted regional analyst Kwame Osei.
“Ecuador’s dollarization brought stability but sacrificed monetary control—Zimbabwe must tread carefully.”
RBZ officials emphasize ZiG’s unique hybrid structure, backed by gold and foreign reserves.
“Our focus is on disciplined liquidity management and fostering productivity,” said RBZ spokesperson Clara Dube.
“However, lasting stability requires rebuilding industries and cutting imports.”
Economists stress that without deeper reforms—such as boosting manufacturing and agricultural output—the ZiG risks following its failed predecessors.
“Currency stability hinges on economic productivity, not just reserves,” warned Osei.
“Zimbabwe must choose between short-term fixes and lasting change.”
As the ZiG’s slide continues, the stakes heighten for a nation grappling with decades of monetary crises. The RBZ’s next moves, analysts say, will determine whether ZiG becomes a sustainable solution or another cautionary tale.
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