Business Correspondent
HARARE \u2013 Zimbabwe\u2019s 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.<\/p>\n\n\n\n
The currency, introduced in 2024, has lost 50% of its value since inception, including a sharp 43% devaluation in September 2024.<\/p>\n\n\n\n
The Reserve Bank of Zimbabwe (RBZ) has closely guarded the 27 ZiG-per-dollar threshold, a level nearly breached during recent volatility.<\/p>\n\n\n\n
\u201cThe 27 mark is a critical psychological barrier,\u201d said economist Tendai Mupaso.<\/p>\n\n\n\n
\u201cBreaching it could trigger panic selling and further erode public trust.\u201d<\/p>\n\n\n\n
Despite a 4% depreciation in 2025\u2014the mildest for a Zimbabwean currency in decades\u2014analysts warn that reliance on liquidity controls, such as high interest rates and restricted money supply, is unsustainable.<\/p>\n\n\n\n
\u201cScarcity alone can\u2019t stabilize a currency,\u201d cautioned Mupaso.<\/p>\n\n\n\n
\u201cWithout organic demand, the ZiG remains vulnerable.\u201d<\/p>\n\n\n\n
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.<\/p>\n\n\n\n
\u201cFull ZiG tax compliance would create consistent demand,\u201d said Harare-based economist Grace Nyoni.<\/p>\n\n\n\n
\u201cBut past gains were undone by liquidity injections\u2014this time, structural reforms must anchor confidence.\u201d<\/p>\n\n\n\n
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.<\/p>\n\n\n\n
\u201cSI 34 is a step toward normalizing the ZiG,\u201d said government spokesperson Fadzai Murombedzi.<\/p>\n\n\n\n
\u201cBut businesses and citizens need assurance that policies won\u2019t abruptly reverse.\u201d<\/p>\n\n\n\n
Comparisons to Venezuela and Argentina underscore the risks of half-measures. Caracas\u2019 Petro-backed bolivar and Buenos Aires\u2019 serial currency resets collapsed amid fiscal deficits and distrust.<\/p>\n\n\n\n
\u201cZiG\u2019s gold reserves offer a firmer foundation, but discipline is key,\u201d noted regional analyst Kwame Osei.<\/p>\n\n\n\n
\u201cEcuador\u2019s dollarization brought stability but sacrificed monetary control\u2014Zimbabwe must tread carefully.\u201d<\/p>\n\n\n\n
RBZ officials emphasize ZiG\u2019s unique hybrid structure, backed by gold and foreign reserves.<\/p>\n\n\n\n
\u201cOur focus is on disciplined liquidity management and fostering productivity,\u201d said RBZ spokesperson Clara Dube.<\/p>\n\n\n\n
\u201cHowever, lasting stability requires rebuilding industries and cutting imports.\u201d<\/p>\n\n\n\n
Economists stress that without deeper reforms\u2014such as boosting manufacturing and agricultural output\u2014the ZiG risks following its failed predecessors.<\/p>\n\n\n\n
\u201cCurrency stability hinges on economic productivity, not just reserves,\u201d warned Osei.<\/p>\n\n\n\n
\u201cZimbabwe must choose between short-term fixes and lasting change.\u201d<\/p>\n\n\n\n
As the ZiG\u2019s slide continues, the stakes heighten for a nation grappling with decades of monetary crises. The RBZ\u2019s next moves, analysts say, will determine whether ZiG becomes a sustainable solution or another cautionary tale.<\/p>\n\n\n\n
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