Source: Growing ZiG uptake signals currency confidence – herald
Gibson Nyikadzino
Senior Reporter
Demand for the ZiG currency continues to rise following the implementation of robust policies anchoring stability, before the country transitions into a mono-currency regime, Reserve Bank of Zimbabwe Governor Dr John Mushayavanhu has said.
Dr Mushayavanhu made the remarks at the weekend, while talking to The Herald’s sister paper, The Sunday Mail, highlighting that the country is in no rush to adopt a mono-currency regime until there is a fulfilment of all major fundamentals.
The transition to a mono-currency is anchored on the conditions-based framework under the RBZ’s 2026-2030 Strategic Plan that includes durable macroeconomic stability with single-digit inflation; adequate foreign currency reserves of at least three to six months of import cover; stable exchange rate dynamics; an efficient foreign exchange management system and increased demand for the local currency, among others.
Between April 2024 to present, demand for the ZiG has increased from 26 percent to around 40 percent of electronic transactions, and also contributing to the capacity utilisation of major industrial sectors.
“The demand for ZiG has been on an increasing trend, as evidenced by a significant increase in ZiG transactions in the National Payments System from 26 percent in April 2024 to current levels of between 35 and 40 percent of electronic transactions.
“Government has also made significant efforts to support the local currency through the requirement to pay 50 percent of QPDs (quarterly payment dates) in the local currency and the settlement of public sector suppliers in ZiG,” Dr Mushayavanhu said.
RBZ Deputy Governor Dr Innocent Matshe last week told delegates at the Africa Economic Development Strategies (AEDS) Mid-Term Economic Review and High-Level Policy Dialogue that the ZiG had remained strong, stable and viable due to import substitution.
Dr Matshe also indicated that the stability of the local currency has been necessitated by the move towards convergence between the parallel market rate and the wholesale exchange rate.
“We have seen greater exchange rate stability with the exchange rate drifting between ZiG25 and ZiG27 per US dollar since September 2024. The Reserve Bank intervention on the willing buyer-willing-seller foreign exchange market amounted to a cumulative total of $1,5 billion since April 2024.
“And when you look at that, and the revenues that the country is generating, that is a very small number. What it also tells you, when you look at the import bill, is that a huge proportion of our import bill is covered by what firms already have in their budgets,” Dr Innocent Matshe said.
An International Monetary Fund (IMF) team led by Mr Wojciech Maliszewski last month commended the resilience of Zimbabwe’s economy and the RBZ’s tight monetary policy to contain inflation.
“The Reserve Bank of Zimbabwe has maintained a tight monetary policy stance to contain inflation and reduce pressures in the foreign exchange market. This stance should continue until inflation expectations are firmly anchored and confidence in the local currency strengthens,” the IMF said in a statement.
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