Zimbabwe’s Foreign Reserves Surge to Over US$500 Million 

Zimbabwe’s foreign currency reserves, backing the local currency Zimbabwe Gold (ZiG), have crossed the US$500 million mark, tripling the amount of ZiG in circulation. This increase in reserves is seen as a crucial step towards stabilizing prices and enhancing the purchasing power of consumers, marking a turning point for the nation’s currency.

The ZiG has strengthened significantly, climbing from an exchange rate of US$1.40 at the end of October to US$1.60 last Friday. This rise reflects the Reserve Bank of Zimbabwe’s (RBZ) successful monetary policies, aimed at stabilizing the local currency. 

According to the RBZ, foreign currency reserves have reached US$509 million, surpassing the total ZiG deposits held in domestic banks, which stand at about ZiG12 billion.

RBZ Governor Dr. John Mushayavanhu stated that the reserve surplus is the result of recent initiatives targeting inflation and exchange rate fluctuations. “The combined effect of these measures has significantly reduced ZiG liquidity in the market,” he said, adding that foreign currency inflows increased by 18 percent in the first nine months of 2024 compared to the same period last year.

To reinforce stability, the RBZ raised its bank policy rate from 20 percent to 35 percent and set reserve requirements for demand deposits at 30 percent and for savings deposits at 15 percent. 

With tight liquidity and high demand for ZiG, economic agents have shown an increased inclination to convert foreign currency holdings into local currency, driven by RBZ policies favoring a strong local currency.

Dr. Mushayavanhu highlighted that Zimbabwe’s total reserve money currently stands at ZiG3.4 billion, backed by foreign currency reserves over three times that amount. 

He emphasized that RBZ will continue strategic foreign exchange interventions, using part of the mandatory 25 percent export surrender requirements to meet legitimate foreign payments and stabilize ZiG’s value. 

Source: bulawayo24 News