The Zimbabwe ZiG currency has remained steady this year, even as the US dollar index (DXY) plunged by double digits. The official ZiG exchange rate was at 26.88 against the US dollar, slightly higher than the January 1 level of 25.82.
Similarly, the black market rate has remained unchanged between 38 and 40 this year.
Strong Zimbabwe economic growth
The Zimbabwe ZiG has held steady this year, helped by the relatively strong performance of the country’s economy.
Recent data showed that the country’s GDP expanded to $45.7 billion in 2024, up from $44.4 billion in 2023. Officials hope that this year will be much better because of the mining and agricultural sectors.
The mining sector will benefit from the resilient gold and platinum prices. Gold price surged to a record high of over $3,500, while platinum spiked to $1,430, up from the year-to-day low of $895.
Gold and platinum prices ae important because Zimbabwe is a major producer. It produced over 37,355 kilograms of gold in 2022, a figure that continues to grow this year. It produced 20,100 kilograms this year, a 46% increase.
It also produced about 15 metric tons of platinum in 2024, accounting for 8% of the global total.
Zimbabwe’s food production has also done better than in 2024, when the country went through a major drought. The government is targeting a 340% increase in production ths year.
Data released in June showed that the country achieved a new record of 300 million kilograms of tobacco output, valued at over $1 billion. This is also notable because Zimbabwe is another top tobacco exporting country.
As a result, the country is considering measures to start servicing its external debt. In a recent statement, Mthuli Ncube sod that the country’s debt-to-GDP ratio improved to 46% from around 60%. He said:
“You can be assured that given this larger GDP base this creates more opportunity and capacity for us to start servicing our external debt. The economy has grown to a point where it can allow us to begin servicing our debts sustainably.”
Ncube hopes that the country will now be able to restructure debts worth over $21 billion. Most of these funds are owed to external organizations like the World Bank and the European Investment Bank.
Implications on the Zimbabwe ZiG
Zimbabwe launched the ZiG currency in April last year after the existing currency plummeted by over 80% during the year.
ZiG was different than other currencies because US dollars and gold backed it. The initial USD to ZiG exchange rate was approximately 14.8, which then surged in September when the central bank devalued it by 43%, resulting in a rate of 24.43.
The bank did that to bridge the gap between the official exchange rate and the black market one. It has then lost only a small value since that devaluation, partly due to the 35% interest rate and the surge in gold reserves, which jumped to 3.4 tons from 1.5 tons a year earlier.
Still, the currency’s future is uncertain because it may end up like the other 5 currencies. These other currencies plummeted because of mismanagement by the central bank and the government.
While ZiG has stabilized, the reality is that it is rarely used in transactions and savings. Instead, most people depend on the US dollar, which is now used in over 75% of all transactions.
These people have good memories of the past currency crashes and its implications. As such, without trust, it is likely that the Zimbabwe ZiG currency will continue deteriorating over time.
Read more: What’s next for the Zimbabwe ZiG exchange rate in 2025?
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