Latest news with #JohnMushayavanhu
Zawya
11 hours ago
- Business
- Zawya
Zimbabwe says gold-backed currency stable but investor doubts persist
Zimbabwe's gold-backed currency now has more than 100% reserve cover and is stable, according to the central bank, but doubts over its credibility remain, underscored by a persistent premium in the parallel market. The Reserve Bank of Zimbabwe on Monday, 16 June 2025 kept its benchmark rate unchanged at 35%, citing a stable exchange rate as one of the reasons, and reported total reserves of $701m. The bank said the portion of transactions carried out using the Zimbabwe Gold (ZiG) currency surged to 43% in May from 26% in April 2024, the month it was introduced. Decades of economic instability and currency devaluations mean most people still use the US dollar for most purchases. But the authorities are hoping the ZiG's gold backing will give Zimbabweans the confidence to adopt it for everyday transactions. "ZiG is our national currency, and as the central bank, we are committed to ensuring its success by maintaining all the fundamental characteristics of sound money, including its function as a reliable store of value," Reserve Bank Governor John Mushayavanhu said. "The Reserve Bank has learned from previous currency failures that maintaining optimum money supply and ensuring monetary stability is vital," he added. Despite the bank's assurances, the gap between the official exchange rate and parallel market rate remains about 20%. "The rate has been stable for more than three months," said black-market trader Pearson Tambudze, attributing the stability to a scarcity of the local currency rather than restored confidence. "There isn't a lot of ZiG in the market," he said. The International Monetary Fund has welcomed the ZiG's stability but is urging Zimbabwe to adopt tighter money-growth limits, a more transparent foreign exchange market and to make progress on clearing an estimated $12.2bn in external arrears. Finance Minister Mthuli Ncube, meanwhile, expressed hope last month that currency stability and appropriate monetary policy would enable Zimbabwe to raise $2.6bn in bridge finance by mid-2026. Investors, however, remain cautious. "We wouldn't invest in Zimbabwe at the current stages. The country needs to have a lot more development before we would consider it," said Jetro Siekkinen at LGT Capital Partners. Economists also flagged concerns over Zimbabwe's reserve cushion, which stands at 0.8 months of import cover, well short of the IMF's recommended three-month safety net. "In terms of priority, I would consider the clearance of arrears with multilateral creditors to be most important," said Lyle Begbie, an economist at Oxford Economics. Two earlier IMF staff-monitored programmes collapsed within 15 months, and Begbie predicted similar outcomes for future efforts. "Ultimately, we are likely years away from the IMF providing concessional financing to Zimbabwe, even if the country does everything right, which itself is not likely," he said.
Zawya
2 days ago
- Business
- Zawya
Wary of global tensions, Zimbabwe holds interest rates at 35%
Zimbabwe, wary of a rise in global tensions, resolved to leave its bank policy rate unchanged at 35%, according to John Mushayavanhu, the central bank governor. 'The MPC noted the broad-based deceleration of global growth occasioned by escalating trade tensions, geo-economic fragmentation, regional and international conflicts and policy uncertainty,' Mushayavanhu said in a statement Monday after a surprise meeting of the Monetary Policy Committee. 'Considering the challenging and rapidly evolving risks to the global growth outlook, the MPC advised the Reserve Bank to maintain a sufficiently tight monetary policy stance.' The central bank was set to hold a rate setting meeting only later this month on June 27, according to a schedule available on its website. Despite, the current uncertain global environment, the bank said it still sees 6% growth in the domestic economy as achievable this year. The strong performance of agriculture is expected to help spur the expansion after improved output from key crops including corn, tobacco and cotton. 'Other sectors are also expected to record positive growth performance, benefiting from the prevailing price and exchange rate stability,' Mushayavanhu added. The southern African nation has kept rates unchanged since it lifted them last September in response to a sharp devaluation of its gold-backed currency, the ZiG. Businesses have repeatedly asked the central bank to reconsider its tight monetary policy stance, which is causing a severe liquidity crunch in the economy. The bank maintains that its policy has helped stabilize the ZiG, short for Zimbabwe Gold, and is seeing increased usage in the economy. It is now used in 43% of transactions in the economy up from 26% last April, according to the governor. The foreign currency reserves backing the ZiG stood at $701 million as of last Friday. The International Monetary Fund last week also voiced support for the ZiG to become the sole currency in the economy. The ZiG is the nation's sixth attempt at establishing a functioning local currency since 2009. © Copyright The Zimbabwean. All rights reserved. Provided by SyndiGate Media Inc. (
TimesLIVE
2 days ago
- Business
- TimesLIVE
Zimbabwe says gold-backed currency stable but investor doubts persist
Zimbabwe's gold-backed currency now has more than 100% reserve cover and is stable, according to the central bank, but doubts over its credibility remain, underscored by a persistent premium in the parallel market. The Reserve Bank of Zimbabwe on Monday kept its benchmark rate unchanged at 35%, citing a stable exchange rate as one of the reasons, and reported total reserves of $701m (R12.63bn). The bank said the portion of transactions carried out using the Zimbabwe Gold (ZiG) currency surged to 43% in May from 26% in April 2024, the month it was introduced. Decades of economic instability and currency devaluations mean most people still use the US dollar for most purchases. But the authorities are hoping the ZiG's gold backing will give Zimbabweans the confidence to adopt it for everyday transactions. "ZiG is our national currency, and as the central bank, we are committed to ensuring its success by maintaining all the fundamental characteristics of sound money, including its function as a reliable store of value," Reserve Bank governor John Mushayavanhu wrote in response to Reuters' questions. "The Reserve Bank has learnt from previous currency failures that maintaining optimum money supply and ensuring monetary stability is vital," he added. Despite the bank's assurances, the gap between the official exchange rate and parallel market rate remains about 20%.
Business Insider
3 days ago
- Business
- Business Insider
Zimbabwe's gold-backed currency faces credibility test despite central bank optimism
Zimbabwe's gold-backed currency, the Zimbabwe Gold (ZiG), continues to face skepticism from both the public and financial analysts, despite central bank assurances of stability and full reserve backing. Zimbabwe's gold-backed currency, the Zimbabwe Gold (ZiG), faces public and financial analyst skepticism Past economic issues, including hyperinflation and currency shifts, continue to erode public trust in new currency measures. The share of transactions using the ZiG has increased, though many citizens still rely on the U.S. dollar due to past economic turmoil. The Reserve Bank of Zimbabwe (RBZ) claims the currency is supported by more than 100% in reserves, including 2.5 tons of gold and $100 million in foreign assets. The ZiG, Zimbabwe's sixth currency attempt in 15 years, was introduced to curb inflation and restore confidence in the local monetary system. Yet many citizens still rely on the U.S. dollar for daily transactions, with past economic turmoil continuing to erode trust. Although the International Monetary Fund has expressed support for the ZiG and its potential to become a full national currency, uptake remains limited. Government efforts to boost usage have yet to overcome deep-rooted doubts among both consumers and investors. According to Reuters, the RBZ kept its benchmark interest rate at 35% on Monday, citing exchange rate stability. It also reported total reserves of $701 million and noted that the share of transactions using the ZiG jumped to 43% in May, up from 26% in April when the currency was launched. The Zig's credibility issues Last year, Zimbabwe introduced a new gold-backed currency known as the ZiG, or Zimbabwe Gold, in a bid to curb longstanding currency instability and decades of hyperinflation. The Zimbabwe Gold (ZiG), has however, continued to face a significant trust gap, as evidenced by persistent premiums in the parallel market, where it trades below the official rate. This skepticism persists despite the central bank's assertion that the ZiG is now backed by more than 100% in reserves, comprising gold and foreign currency. The country's tumultuous monetary history, marked by hyperinflation and abrupt currency shifts, has contributed to this lack of confidence. While responding to Reuters, Reserve Bank Governor John Mushayavanhu reaffirmed the central bank's commitment to the ZiG, stating: ' ZiG is our national currency, and we are committed to ensuring its success by maintaining all the fundamental characteristics of sound money, including its function as a reliable store of value. ' He added, ' The Reserve Bank has learned from previous currency failures that maintaining an optimal money supply and ensuring monetary stability is vital. ' Finance Minister Mthuli Ncube remains optimistic, expressing confidence that monetary reforms will pave the way for $2.6 billion in bridge financing by mid-2026. However, global investors are cautious, with Jetro Siekkinen of LGT Capital Partners stating, " We wouldn't invest in Zimbabwe at the current stages. The country needs to have a lot more development before we would consider it," as reported by Reuters. Analysts have also raised concerns about Zimbabwe's overall reserve position, noting that the country holds just 0.8 months of import cover, well below the International Monetary Fund's three-month benchmark. Other factors include past policy failures, doubts over gold reserve transparency, limited convertibility, and persistent inflation which all fuel skepticism. A strong black-market presence and continued reliance on U.S. dollars further weaken confidence.
The Star
3 days ago
- Business
- The Star
Zimbabwe maintains policy rate to ensure economic stability
HARARE, June 17 (Xinhua) -- Zimbabwean monetary authorities have decided to maintain the bank policy rate at 35 percent to ensure economic stability amid global trade tensions, Reserve Bank of Zimbabwe (RBZ) Governor John Mushayavanhu said on Tuesday. In a statement released following a meeting of the RBZ Monetary Policy Committee (MPC) held on Monday, Mushayavanhu said the central bank's tight monetary policy stance has resulted in sustained stability in the exchange rate and inflation during the second quarter of 2025. As a result of the positive domestic macroeconomic developments, the MPC resolved to maintain the bank policy rate at 35 percent to maintain price and exchange rate stability, Mushayavanhu added. The bank policy rate was raised from 20 percent to 30 percent in September last year when the central bank devalued the local currency, Zimbabwe Gold, by 43 percent following exchange rate volatility. "The MPC noted the broad-based deceleration of global growth occasioned by escalating trade tensions, geo-economic fragmentation, regional and international conflicts, and policy uncertainty," he said. "Considering the challenging and rapidly evolving risks to the global growth outlook, the MPC advised the RBZ to maintain a sufficiently tight monetary policy stance." He noted that despite uncertainty in the external environment, Zimbabwe's economy continues to show resilience and is projected to grow by 6 percent in 2025, underpinned by a recovery in the agricultural sector. Other sectors are also expected to record positive growth performance, benefiting from the prevailing price and exchange rate stability, he said. Last week, the Parliament of Zimbabwe called for a reduction in bank charges and the bank policy rate to boost public confidence in the banking sector and stimulate lending to the country's productive sectors.
