Zimbabwe gold-backed currency undervalued against dollar – central bank

The ZiG should be trading at around 15 to the greenback, rather than the official rate of about 25, Reserve Bank chief John Mushayavanhu has said

Zimbabwe’s gold-backed currency (ZiG) is undervalued by nearly half and should be trading much stronger against the US dollar, the southern African nation’s central bank has said.

Reserve Bank of Zimbabwe Governor John Mushayavanhu said on Friday that the ZiG should be valued at around 15 to the US dollar, compared with the official rate of about 25, Bloomberg reported on Monday.

“If we wanted to buy back all the local currency in circulation using our reserves, we could do so at an exchange rate of around 15 to the dollar,” Mushayavanhu said.

The ZiG was launched in April 2024 to replace the Zimbabwe dollar, which had been battered by inflation and repeated bouts of depreciation. It was billed as a currency backed by gold and foreign exchange reserves, with Harare presenting it as a key plank in its push to stabilize prices and eventually reduce reliance on the US dollar. Zimbabwe held 3.4 metric tons of gold reserves as of June 2025, according to official data.

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In its 2026 monetary policy statement, the Reserve Bank said foreign currency reserves had risen from $276 million in April 2024 to $1.2 billion by December 2025, while a March policy committee statement said inflation had fallen to single digits and exchange-rate stability had been maintained.

Despite lower inflation and efforts to stabilize the currency, more than 90% of transactions in Zimbabwe are still done in US dollars, the Confederation of Zimbabwe Industries (CZI) said. In a December report, the group said confidence in the local currency remains low, with many businesses viewing its current stability as artificial and unsustainable. The IMF has also warned that the central bank continues to support the exchange rate by selling foreign currency, meaning it is still heavily managed.

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On Friday, Mushayavanhu admitted that the ZiG’s mismatch against the dollar reflected weak market confidence in the currency.

“It’s a function of the confidence of the market in the central bank, and we’re still trying to rebuild that confidence,” Mushayavanhu said in an interview on the sidelines of the spring meetings of the IMF and World Bank in Washington, according to Bloomberg.

“We had lost it and we’re trying to rebuild it,” the governor added.