Economic Outlook and Currency Stability in Zimbabwe
Zimbabwe’s finance minister, Mthuli Ncube, has expressed confidence that the local ZWG currency will continue to strengthen during the Fourth Quarter of the year. This optimism is based on increased demand for periodic tax settlements, which are expected to drive the appreciation of the exchange rate.
Since last year, the central bank has adopted a restrictive monetary policy aimed at stabilizing prices, the currency, and exchange rates. This strategy involves maintaining a high bank policy rate of 35%, which is designed to reduce speculative borrowing. Such borrowing has historically contributed to excess liquidity and illicit parallel market activity.
The central bank’s approach has led to a stable exchange rate premium over the past year, resulting in a significant reduction in annual inflation. Inflation has decreased by more than 50% to 32.7%. Speaking to parliamentarians in Bulawayo, Ncube highlighted that the local currency is well-positioned to strengthen further as the year concludes.
“The Fourth Quarter taxes are expected to increase demand for ZiG, and the appreciation of the exchange rate,” Ncube stated. “In the outlook, exchange rate stability is envisaged, underpinned by the broad acceptance of the ZiG and the continued implementation of prudent fiscal and monetary policies by the Government.”
Ncube attributed the current stability in the exchange rate—maintaining a premium of US$1: ZWG 26.68—to the aggressive policies implemented to protect the currency. He noted that the parallel market exchange rate premium has remained stable, falling to below 25% in August 2025, aligning with other countries such as Kenya and Zambia.
Building Foreign Currency Reserves
Ncube also emphasized that the strategy for accelerating the accumulation of foreign currency reserves is showing positive results following the introduction of the ZiG. Total foreign currency reserves have grown from below US$300 million in April 2024 to over US$900 million by September 2025, with a target of reaching US$1 billion by December 2025.
Zimbabwe is currently building both gold and USD reserves, which are expected to fully cover ZiG reserve money and deposits. This dual approach is critical for ensuring long-term economic stability and reducing dependency on external financing.
Inflation Projections and Future Outlook
Ncube provided projections for inflation, stating that it is expected to average 61.3% in 2025, decline to 22.8% by the end of the year, and eventually reach single-digit levels by 2027. These projections are supported by continued exchange rate stability and the implementation of prudent fiscal and monetary policies.
The government’s focus on maintaining a stable exchange rate and managing inflation is crucial for restoring investor confidence and promoting sustainable economic growth. With the ZiG gaining broader acceptance and the central bank’s policies proving effective, Zimbabwe is taking meaningful steps toward economic recovery.
Key Economic Indicators
- Exchange Rate Premium: Stabilized at US$1: ZWG 26.68.
- Annual Inflation: Reduced by over 50% to 32.7%.
- Foreign Currency Reserves: Increased from below US$300 million to over US$900 million.
- Target for Reserves: US$1 billion by December 2025.
- Inflation Projections: Averaging 61.3% in 2025, declining to 22.8% by year-end, and reaching single digits by 2027.