RESERVES backing Zimbabwe Gold (ZiG) have risen to nearly US$700 million, significantly boosting the stability of the local currency, it has been learnt.
In an interview with The Sunday Mail, Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mushayavanhu said the reserves had jumped from US$276 million at the launch of ZiG on April 5, 2024 to US$683 million as of Thursday last week, enough to cover both the money in circulation and all ZiG-denominated bank deposits.
This far exceeds the bank’s original 100 percent reserve coverage target.
Dr Mushayavanhu said the growth of RBZ’s reserve position — which includes US$352 million in gold holdings, US$258 million in cash and nostro balances, and the remainder in other reserve assets — demonstrates the currency’s growing sustainability.
“In the year following the launch of the structured currency, Zimbabwe Gold, the Reserve Bank has achieved various milestones regarding the sustainability of the currency,” said Dr Mushayavanhu.
“Notably, the foreign currency reserves backing ZiG have grown by 145 percent from US$276 million on April 5, 2024 to US$683 million on May 29, 2025.
“In addition, the interbank foreign exchange market has remained stable and able to satisfy demand on the back of increased foreign currency receipts.
“In this regard, the premium between the formal and parallel exchange rates remains narrow and within acceptable international benchmarks, which also buttresses the stability and predictability of ZiG.”
The strengthening of international gold prices, Dr Mushayavanhu said, had enhanced the value of Zimbabwe’s gold holdings, reinforcing the foundations of the structured currency.
“The recent firming of international gold prices has positively impacted Zimbabwe’s reserve position, reinforcing the foundation of the structured currency framework,” he said.
“While precious metal valuations are subject to volatility, the current uptrend has enhanced the real value of the Reserve Bank gold holdings, thereby strengthening the reserve cover for the ZiG currency.”
Capacity
The development, he said, had improved the central bank’s capacity to maintain currency stability and bolsters public confidence in ZiG’s credibility.
“The enhanced reserves provide a stronger buffer against external shocks and align with the Reserve Bank’s broader objective of sustaining monetary and financial stability.
“The Reserve Bank will continue to closely monitor global commodity markets to ensure the continued resilience and adequacy of the reserve cover framework that underpins Zimbabwe’s monetary policy architecture.”
The central bank chief said continued stability in the interbank foreign exchange market, coupled with increased foreign currency receipts, had helped narrow the gap between official and parallel exchange rates.
This stability, he added, along with the growing use of ZiG for transactions via the National Payment System, points to rising confidence in the currency.
“At the introduction of the structured currency, the RBZ set an initial target of maintaining a full (100 percent) reserve cover for the ZiG monetary base amounting to about ZiG1,3 billion.
“At inception, this entailed backing the entire local currency component of reserve money, approximately equivalent to US$90 million, with equivalent reserve assets.
“As of May 29, 2025, the total reserve money in circulation denominated in ZiG was ZiG4,723 billion, equivalent to approximately US$173 million.
“This figure remains fully covered by the total reserves of US$683 million, resulting in a reserve coverage ratio well in excess of the initial 100 percent target.
“The reserves also cover the entire ZiG deposits in the banking sector, which stood at ZiG16,99 billion as of May 29, 2025.
“This more than 100 percent reserve coverage reinforces the Reserve Bank’s commitment to preserving the stability, integrity and credibility of ZiG as a structured currency.”
Higher denominations
Dr Mushayavanhu said the RBZ is also preparing to roll out a new series of higher-quality ZiG banknotes in denominations of ZiG10, ZiG20, ZiG50, ZiG100 and ZiG200.
The higher denominations will be introduced gradually based on demand, he said.
“The process of procuring and producing banknotes, however, can be lengthy and the Reserve Bank will keep the public updated on the progress,” he said.
“In addition to issuing the enhanced quality banknotes, the Reserve Bank announced measures to support the increased use of ZiG, particularly in the informal sector.
“These measures include the planned enforcement of point-of-sale (POS) machines for all businesses in the economy.
“Moreover, actions being taken by Government to increase the demand for the local currency through tax requirements in local currency, such as the quarterly payment dates (QPDs), will also continue to entrench the demand and confidence in the local currency.”
He said the directive by the Government to enforce part payment of QPD taxes by corporates helped boost demand for ZiG in recent months.
“The requirement for quarter provisional income tax payments (QPD) on a 50-50 basis for taxpayers that earn 50 percent or more income in local currency has effectively increased the demand for ZiG in the economy. The increased demand for ZiG has in turn contributed to the prevailing exchange rate stability, which is critical for anchoring inflation expectations.”
