The Zimbabwe ZiG currency is flourishing: here’s why

The Zimbabwe ZiG currency is holding steady against the US dollar and other currencies as its reserves jump and the country’s economy perform well. The official USD/ZWL exchange rate was quoted at 26.5 by the Zimbabwean Central Bank.

Why the Zimbabwe ZiG is stable

The ZIG currency has been relatively stable this week because of the growing reserves as gold prices surged. Gold price soared to a record high of $3,498 in April. While it has pulled back to $3,348, it remains significantly higher than the January 1 level of $2,600. 

Gold has jumped because of Donald Trump’s trade policies that have pushed investors to safe-haven assets. Additionally, the price has increased due to Donald Trump’s Big Beautiful Bill, which is expected to boost public debt substantially over the next decade. 

Gold price has jumped as hopes that the Federal Reserve will cut interest rates soon. Most analysts expect the bank to cut in September and in the other two meetings of the year. Gold does well when the Fed is slashing rates. 

The soaring gold price has coincided with soaring mining operations. Data shows that the country mined 20,103 kilograms of gold in the first six months, pushing its total gold reserves to 3.4 tons whose valuation is over $371 million. ZiG was started with an initial gold reserve worth $150 million. 

Zimbabwe’s economic recovey

The Zimbabwe ZiG has also stabilized because of the ongoing economic recovery, which is expected to hit this year. This is a strong recovery, aided by the ongoing recovery in mining and agriculture. The country has emerged from a drought, meaning that it will import less food this year.

The strong Zimbabwean economy has raised the hopes that the country will end the 25-year default. In a recent statement, the World Bank urged Zimbabwe to seek G20 aid to end the default. 

Most importantly, the government is making plans to de-dollarize the economy, with the official plan set to be unveiled in November this year. That move will help to boost the ZiG demand considering that the US dollar is now used in over 80% of all transactions. The move has been supported by top institutions, including the IMF, which noted:

“Right now we see good stability in the official market and we also see a convergence between the parallel and official rate. Ideally, we would like to see an elimination of this gap, we would like to see one exchange rate.”

The Zimbabwe ZiG has also performed well because of the ongoing actions by the central bank, which left interest rates unchanged at 35% last week. That has made it a viable carry trade opportunity, where investors borrow the cheaper US dollar and invest in the higher-yielding ZiG.

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