HARARE/JOHANNESBURG (Reuters) – Zimbabwe’s central bank says its new gold-backed currency is stable and fully supported by reserves. However, many investors and citizens remain doubtful, as shown by a continued gap between the official and parallel market exchange rates.
The Reserve Bank of Zimbabwe announced on Monday that it is keeping its main interest rate at 35%, citing a stable exchange rate. It reported total reserves of $701 million. The bank also said use of the new Zimbabwe Gold (ZiG) currency rose sharply, accounting for 43% of transactions in May, up from 26% in April—the month ZiG was launched.
Although the government is pushing for broader use of ZiG, most Zimbabweans still prefer to use U.S. dollars due to years of economic turmoil and past currency collapses. Officials hope the gold backing behind ZiG will build trust and encourage people to use it for everyday purchases.
“ZiG is our national currency, and as the central bank, we are committed to making it a reliable store of value,” said Reserve Bank Governor John Mushayavanhu in written comments to Reuters. “We have learned from past failures. Controlling money supply and ensuring stability is key.”
Despite the central bank’s confidence, the parallel market continues to trade the ZiG at about 20% below the official rate.
“The exchange rate has been steady for over three months,” said black-market trader Pearson Tambudze. “But that’s mostly because there’s very little ZiG in circulation—not because people have regained trust.”
The International Monetary Fund (IMF) has welcomed the relative stability of ZiG, but it warned that Zimbabwe must do more. It urged the country to adopt stricter controls on money supply, make the foreign exchange system more transparent, and work to resolve its $12.2 billion in unpaid external debt.
Finance Minister Mthuli Ncube said last month that stable currency conditions and sound monetary policies could help Zimbabwe secure $2.6 billion in bridge financing by mid-2026. But international investors remain cautious.
“We wouldn’t invest in Zimbabwe at this point,” said Jetro Siekkinen of LGT Capital Partners. “The country needs to make much more progress first.”
Economists are also concerned about the country’s low reserve coverage. Zimbabwe currently holds enough reserves to cover only 0.8 months of imports—far below the IMF’s recommended three-month benchmark.
“For now, clearing arrears with international lenders should be the top priority,” said Lyle Begbie, an economist at Oxford Economics.
Zimbabwe has had two IMF staff-monitored programs fail in recent years. Begbie said future programs face the same risks.
“Even if Zimbabwe does everything right—which is unlikely—it may still take years before the IMF agrees to concessional funding,” he said.
