HARARE – Zimbabwe’s inflation rate slowed in November, offering respite from months of economic volatility linked to the gold-backed ZiG currency. The Zimbabwe National Statistics Agency (ZimStat) announced on Tuesday that monthly consumer prices rose by 11.7%, a significant deceleration from October’s 37.2% increase.
According to Bloomberg, the easing inflation comes after the central bank’s measures to stabilise the ZiG — short for Zimbabwe Gold — which suffered a sharp 43% devaluation in late September. The currency has since staged a recovery, appreciating 13% against the US dollar so far this month.
Monetary Policies Show Results
The Reserve Bank of Zimbabwe (RBZ) attributes the currency’s rebound to its tight monetary stance, including a key interest rate hike to 35% from 20% in September. The central bank has committed to limiting excess liquidity to curb inflationary pressures.
Currently, the ZiG trades at 25.33 per dollar on the official market, according to RBZ data. On the parallel market, where rates had plummeted to 50 per dollar, the currency has recovered and is now quoted between 35 and 40 per dollar, according to ZimPriceCheck.com.
Finance Minister Mthuli Ncube is expected to outline additional measures to bolster the ZiG during his national budget presentation on Thursday. Analysts speculate that policies to promote broader adoption of the gold-backed currency could further stabilise the economy.
A Path Toward Currency Reform
Launched in April, the ZiG represents Zimbabwe’s sixth attempt at establishing a stable local currency in 15 years. The government has cautiously introduced the currency, with Ncube telling Bloomberg earlier this month that the ZiG would become Zimbabwe’s sole legal tender “when the time is right.”
The currency’s performance remains a critical marker of economic reform efforts in a country plagued by hyperinflation and currency instability over the past two decades.
Economic Challenges Persist
Despite the positive signs, challenges remain. Annual inflation remains elevated, and volatility in the parallel market underscores lingering uncertainties. Analysts warn that sustaining the ZiG’s recovery will require continued discipline in monetary policy, fiscal responsibility, and robust measures to restore public trust in the currency.
Broader Implications
Zimbabwe’s ability to stabilise its currency and manage inflation is closely watched by regional and international investors. The government’s strategy could serve as a model for other economies facing similar challenges, while success may unlock new opportunities for trade and investment in the southern African nation.
As the budget announcement approaches, all eyes will be on Minister Ncube to outline plans that reinforce the ZiG’s recent gains and address the broader economic challenges Zimbabwe faces.
For more updates on Zimbabwe and African markets, follow Bloomberg Africa on WhatsApp or sign up for the Next Africa newsletter.