Mishma Chakanyuka, Staff Writer 
Zimbabwe’s currency, the Zimbabwe Gold (ZiG), may achieve stability only when demand for it reaches critical levels within the economy, says Reserve Bank of Zimbabwe (RBZ) Monetary Policy Committee member Persistence Gwanyanya.
Since its introduction in April, the ZiG has faced turbulence, recently devaluing from around 14 to nearly 25 to the US dollar.
This devaluation has driven up the cost of goods and services and disrupted several supply chains, heightening concerns among investors about the currency’s stability and the broader economic outlook.
“When we get to the point of super demand for ZiG, such demand as is expected from government through taxes, duties, and other statutory obligations, I think we will be in a position to support permanent currency stability,” Gwanyanya told The Financial Gazette.
He suggested that other institutions could back the ZiG, reinforcing its role in the economy and making it “difficult for the public to sustainably reject the ZiG as a currency.”
Looking ahead, Gwanyanya noted that the upcoming national budget will address the challenges facing the ZiG.
“This is going to deal with what could be the exiting of our local currency or the rejection of our local currency, to support permanent stability,” he said.
However, business leaders and economists have voiced grave concerns over the currency’s volatility. Zimbabwe National Chamber of Commerce (ZNCC) chief executive Chris Mugaga emphasised that the RBZ’s recent adjustments revealed the presence of a fixed exchange rate system, which could erode confidence in the local currency.
“Once a central bank adjusts an exchange rate, it is a devaluation, and it signals that we are working with a fixed exchange rate,” he remarked.
Mugaga warned that this intervention might fuel further speculation and mistrust in the ZiG.
“What needed to be done was to leave the market to adjust the exchange rate, not authorities,” he advised.
Economist Prosper Chitambara also stressed the importance of letting market forces determine exchange rates as a means of restoring confidence in the currency, echoing Mugaga’s concerns. “Market-driven adjustments are essential for currency stability,” he suggested, pointing to the risks of centrally managed rates.
Adding to the discussion, economist Vince Musewe predicted that the informal market would continue setting exchange rates at a premium over the official rate, indicating persistent scepticism toward the ZiG.
As Zimbabwe approaches the 2025 national budget presentation, many await decisive moves from authorities to address the ZiG’s challenges and stabilize the economy.
