RBZ interventions strengthen ZiG

Debra Matabvu

THE Zimbabwe Gold (ZiG) currency has strengthened on the parallel market, moving from US$1:ZiG40 to US$1:ZiG35, as interventions by the Reserve Bank of Zimbabwe (RBZ) have tightened liquidity in the market and curbed speculation.

The central bank’s strict monetary policies and adjustments to the willing-buyer, willing-seller (WBWS) interbank market have reduced demand for foreign currency on the black market, with businesses now accessing the bulk of their forex needs through formal channels, lowering reliance on illicit trade.

According to RBZ Governor Dr John Mushayavanhu, monetary authorities have ensured a steady supply of forex on the market, with 60 percent of the funds offered on the WBWS market remaining untapped, proving that official channels can meet market demand.

The apex bank has also restricted money supply growth, a development that has helped stabilise inflation and strengthen the local currency.

Responding to questions from The Sunday Mail, Dr Mushayavanhu said a US$500 million current account surplus recorded in 2024 has further reinforced market confidence.

“Indeed, the exchange rate has been strengthening on the foreign exchange parallel market, reflecting the effectiveness of the tight monetary policy stance being pursued by the Reserve Bank to consolidate the ongoing price and currency stability,” he said.

“The current monetary and financial conditions have, thus, managed to significantly curtail speculative activities in the foreign exchange market.

“The drop in the parallel market exchange rate also reflects the effectiveness of the willing-buyer, willing-seller interbank foreign exchange market and the adequacy of foreign exchange due to regular interventions by the Reserve Bank.”

Businesses, he said, have been accessing their full foreign currency requirements from the formal WBWS market to meet all bona fide and legitimate forex requirements.

“This development reduced demand and activity on the parallel market,” he added.

“Reflecting the adequacy of foreign exchange on the WBWS market, the interventions by the Reserve Bank have seen reduced take-up of forex offered at approximately 60 percent, indicating that formal market forex demand is being met in full.”

With the 2025 Monetary Policy Statement refining the WBWS market, he said, the RBZ expects continued exchange rate stability and a further decline in parallel market activity.

“The current disparity between the official and parallel exchange rates, therefore, reflects extra premiums relating to searching costs and illegality premiums associated with transacting in the parallel market instead of market fundamentals, which are currently favourable.