Zimbabwe's gold-backed currency, ZiG, has completed its longest period of stability since its launch in April last year, bolstering hopes for sustained price stability, renewed investor confidence, and a recovery in household spending power.
According to analysts and business leaders, the steady exchange rate is beginning to ease inflationary pressures and encourage greater use of the local currency, dispelling earlier doubts about the durability of the stability.
ZiG has held firm, distancing the country from its troubled monetary past -- most notably the hyperinflation of July 2008, when inflation peaked at 208 million percent, wiping out local currency savings and undermining public trust.
Between February 2019, when the Zimbabwe dollar was reintroduced and April 2024, when ZiG was launched, the country had not experienced any prolonged currency stability. The Zimbabwe dollar suffered significant devaluation and depreciation following its relaunch, leading to diminished confidence and widespread reliance on the US dollar for everyday transactions.
But the landscape is shifting.
Monthly inflation has been on a downward trend since February 2025, supported by tight monetary and fiscal policies and the relative stability of the ZiG. Business leaders, economists, and policymakers are closely monitoring monthly inflation, as its trajectory over a year determines the annual rate.
From February to July 2025, inflation averaged between 0.5 percent and 0.6 percent, even dipping into negative territory. The Reserve Bank of Zimbabwe projects monthly inflation to remain below three percent for the rest of the year, potentially returning to the low levels seen earlier in 2025.
The sustained stability of the local currency has narrowed the gap between the official exchange rate and the parallel market rate -- from a peak of 100 percent to around 26 percent -- a key factor in stabilising local prices.
The central bank forecasts annual inflation to fall below 30 percent by year-end, following a temporary spike in September due to base effects from 2024 price increases.
For ordinary Zimbabweans, whose incomes have long been eroded by currency volatility, the benefits of a more stable ZiG are already being felt -- particularly in the form of predictable prices and more consistent costs for essentials like public transport.
"Predictable exchange rates make it easier for people to plan purchases and avoid panic buying. Stability reduces the need for traders to charge extra to cover risks and that helps to protect household budgets," said economist Gladys Shumbambiri-Mutsopotsi.
She said that prolonged stability allows authorities to anchor expectations -- an essential step in breaking the cycle of inflationary fears that have haunted the economy since 2008.
The business community, long constrained by erratic exchange rates and limited working capital, is now finding room to plan and invest.
Dr Nxaba Ndiweni, an industrialist, said local manufacturers are beginning to benefit from pricing in the local currency without fearing sudden losses.
"The stability we are seeing now is a lifeline. When companies can rely on a currency that holds its value, they are more willing to commit to production and investment," he said.
Importers also report reduced reliance on scarce US dollars for daily operations, lowering transaction costs. Some firms are shifting procurement to local suppliers, encouraged by steadier pricing.
Namatai Maeresera, an economic analyst, said the recent moderation in producer prices is encouraging, but cautioned that fiscal discipline remains critical.
"Annual inflation remains high by global standards. If the Government avoids monetary slippage and keeps reserves intact, confidence will continue to build," he noted.
He said that positive sentiment could help Zimbabwe shed its high-risk status, attracting capital and restoring credit lines.
The Reserve Bank of Zimbabwe attributes the slowdown in inflation to the gold backing of the ZiG and tighter controls on money supply -- claims supported by several local economists.
If the current trend continues, analysts believe interest rates could gradually fall, reducing borrowing costs for businesses and households. Lower lending rates would stimulate credit for small enterprises and mortgages, while higher real wages would support consumer demand.
"The potential benefits are very real. As inflation comes down and interest rates ease, people will have more disposable income, and that feeds back into stronger economic activity," said Ms Shumbambiri-Mutsopotsi.
For workers whose wages have been eroded by exchange rate volatility, the real test will be purchasing power. Economists say that if inflation continues to slow, households could see a measurable rise in disposable income within two years.
Mr Maeresera argued that improved confidence in the local currency would encourage banks to lend more, unlocking capital for entrepreneurs and job creation.
"This creates a virtuous cycle. Higher incomes boost demand, firms expand production, and the economy grows from within rather than being wholly reliant on foreign currency inflows," he said.
Officials have pledged to maintain strict fiscal discipline to protect the ZiG, while strengthening the willing-buyer, willing-seller foreign exchange system to keep the parallel market in check.
Dr Ndiweni urged authorities to use the stable conditions to implement industrial reforms.
"Public procurement can be a powerful tool," he said. "If the Government prioritises domestic firms, stability will translate directly into jobs and higher output."
For now, the prevailing narrative is more optimistic than Zimbabwe has seen in years. Prices are more predictable, companies are planning with greater certainty, and consumers are no longer facing surprises at the till.
"The ordinary man in the street feels it most when his wage can stretch a little further. That's starting to happen, and if we stay the course, confidence will return," said Ms Shumbambiri-Mutsopotsi.
If the currency's stability endures, Zimbabwe could see annual inflation steadily decline, interest rates ease and economic growth prospects brighten.
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