THE imminent introduction of new Zimbabwe Gold (ZiG) banknotes will not lead to increases in prices of goods and services as the rollout will be supported by ongoing prudential management of the economy.
Annual inflation has fallen to single-digit levels for the first time in nearly three decades.
In an interview with The Sunday Mail, Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mushayavanhu said the issuance of the new family of ZiG notes will be strictly demand-driven and will not increase money supply, thereby safeguarding price and exchange rate stability.
He said details outlining the rollout will be outlined in the 2026 Monetary Policy Statement later this month.
The introduction of the notes comes at a time when macroeconomic fundamentals are strengthening, with annual inflation declining to 4,1 percent in January 2026, reflecting improved monetary discipline and growing confidence in the local currency.
“As advised in previous Monetary Policy Statements, the upgrading of ZiG banknotes is at an advanced stage, and specific details will be contained in the forthcoming Monetary Policy Statement to be issued in February 2026,” he said.
“The issuance of the upgraded family of ZiG banknotes will not induce inflationary pressures as the Reserve Bank will issue notes based on market demand.”
Banks, he said, will simply exchange electronic balances for physical cash through existing reserve accounts held at the central bank, meaning there will be no net increase in reserve money.
“Ordinarily, the issuance of currency to the banking sector takes place through cash orders submitted by banks to the Reserve Bank.
“In this regard, the quantity of reserve money will not change as banks use their deposits at the Reserve Bank to buy the desired quantity of cash guided by the needs of their clients.
“Stated differently, banks will be simply swapping electronic balances for physical notes with no change in the quantity of money.
“As such, the injection of cash into the market will be demand-driven, linked to the needs of economic agents and changes in economic activity.”
Appreciation
Dr Mushayavanhu attributed the recent appreciation of ZiG against the United States dollar on the interbank market to prudent monetary policy measures, including tight liquidity management, a market-determined exchange rate regime and stronger coordination between fiscal and monetary authorities.
He said increased foreign currency inflows, driven by improved export earnings and resilient diaspora remittances, have significantly boosted the country’s external position.
Foreign currency receipts rose to US$16,2 billion in 2025 from about US$13,3 billion in 2024, helping the country record an estimated current account surplus of around US$2 billion, compared to US$500 million the previous year.
As a result, official reserves anchoring ZiG grew sharply to US$1,2 billion — equivalent to 1,5 months of import cover — from less than 0,2 months when the currency was introduced in April 2024.
“These improvements have allowed the interbank foreign exchange market to meet all bona fide foreign payments, reducing reliance on the parallel market,” he said.
The convergence between interbank and parallel market exchange rates, Dr Mushayavanhu added, reflects growing confidence in the official market and enhanced availability of foreign currency.
In emerging economies, he said, a parallel market premium below 20 percent generally signals currency stability.
“The convergence of the interbank and parallel markets reflects the increased role of the official market in supplying foreign currency for the economy,” he said.
“This has significant benefits for the broader economy.
“The convergence allows consistency and predictability in the pricing of goods and services by reducing the pass-through of exchange rate changes to domestic prices.”
The convergence, he added, reduces the value erosion on generators of foreign currency on the surrendered portion of export proceeds.
“As a result, economic agents will be in a position to accept and keep the local currency without fear of losing value.
“Reflecting this phenomenon, the country has witnessed economic agents keeping ZiG for relatively longer periods and only using it as and when required, which eliminated the quest for quick conversion to foreign currency for fear of losing value.”
He added that improved stability has boosted consumer purchasing power and enabled businesses to undertake longer-term planning and investment.
The RBZ has pursued an aggressive reserves accumulation strategy since April 2024, targeting both foreign currency and precious metals such as gold.
The strategy relies on in-kind mining royalties and export surrender requirements, supported by strong global commodity prices, particularly gold and platinum.
International official reserves increased from US$276 million at the introduction of ZiG to US$1,2 billion by December 2025, comprising about US$574 million in foreign currency and US$566 million in gold.
The central bank aims to raise reserves to between three and six months of import cover by 2030, although Dr Mushayavanhu said current progress suggests the target may be achieved ahead of schedule. – Herald
