Zimbabwe's central bank chief tightened foreign currency retention rules for exporters Thursday, marking a significant shift in monetary policy aimed at strengthening the recently introduced ZiG currency.
Reserve Bank of Zimbabwe Governor John Mushayavanhu declared exporters must surrender 30% of their foreign earnings for conversion into ZiG, up from the previous 25%. This measure seeks to increase local currency supply and build foreign exchange reserves.
"The adjustment enhances stability in the interbank foreign exchange market through increased foreign currency supply, building critical reserves needed to anchor the ZiG," Mushayavanhu said during his monetary policy statement.
Exporters can deposit their additional converted ZiG into a special central bank fund, allowing withdrawals at official interbank rates. Yet mining and agricultural sectors have voiced strong opposition, citing extensive dollar-denominated operational costs. The mining industry had previously sought an increase in foreign currency retention to 85%.
The central bank removed the 5% trading margin for foreign exchange transactions implemented during the ZiG's launch. Companies gained permission to trade foreign currency at market-determined margins without quantity limits, addressing business concerns about exchange rate distortions.
Interest rates remained steady at 35%, though minimum bank deposit rates for savings accounts rose by 1.5 percentage points to 5%. Zimbabwe's gold and foreign exchange reserves expanded to US$550 million, representing an 87% increase since the ZiG's introduction. Gold reserves reached 2.7 tonnes, climbing from 1.5 tonnes.
The country recorded US$13.3 billion in foreign currency inflows during 2024, driven by US$7.9 billion from exports and US$2.15 billion from diaspora remittances. Despite strong mineral export performance, particularly in gold, imports climbed to US$9.1 billion, primarily due to drought-induced food and grain purchases.
The central bank announced plans to introduce redesigned ZiG notes with enhanced durability features meeting international standards. Between April and December 2024, the bank intervened in currency markets, selling US$407.4 million to stabilize the ZiG, followed by an additional US$35 million in January 2025.
These policy adjustments highlight the government's continued dependence on export sectors to maintain local currency stability. Industry experts suggest the increased surrender requirements might discourage investment in key economic sectors, raising concerns about long-term growth prospects.
The central bank faces ongoing challenges balancing economic stabilization efforts against operational pressures faced by businesses, particularly in export-oriented industries vital to Zimbabwe's economic recovery.
Reserve Bank of Zimbabwe Governor John Mushayavanhu declared exporters must surrender 30% of their foreign earnings for conversion into ZiG, up from the previous 25%. This measure seeks to increase local currency supply and build foreign exchange reserves.
"The adjustment enhances stability in the interbank foreign exchange market through increased foreign currency supply, building critical reserves needed to anchor the ZiG," Mushayavanhu said during his monetary policy statement.
Exporters can deposit their additional converted ZiG into a special central bank fund, allowing withdrawals at official interbank rates. Yet mining and agricultural sectors have voiced strong opposition, citing extensive dollar-denominated operational costs. The mining industry had previously sought an increase in foreign currency retention to 85%.
The central bank removed the 5% trading margin for foreign exchange transactions implemented during the ZiG's launch. Companies gained permission to trade foreign currency at market-determined margins without quantity limits, addressing business concerns about exchange rate distortions.
Interest rates remained steady at 35%, though minimum bank deposit rates for savings accounts rose by 1.5 percentage points to 5%. Zimbabwe's gold and foreign exchange reserves expanded to US$550 million, representing an 87% increase since the ZiG's introduction. Gold reserves reached 2.7 tonnes, climbing from 1.5 tonnes.
The country recorded US$13.3 billion in foreign currency inflows during 2024, driven by US$7.9 billion from exports and US$2.15 billion from diaspora remittances. Despite strong mineral export performance, particularly in gold, imports climbed to US$9.1 billion, primarily due to drought-induced food and grain purchases.
The central bank announced plans to introduce redesigned ZiG notes with enhanced durability features meeting international standards. Between April and December 2024, the bank intervened in currency markets, selling US$407.4 million to stabilize the ZiG, followed by an additional US$35 million in January 2025.
These policy adjustments highlight the government's continued dependence on export sectors to maintain local currency stability. Industry experts suggest the increased surrender requirements might discourage investment in key economic sectors, raising concerns about long-term growth prospects.
The central bank faces ongoing challenges balancing economic stabilization efforts against operational pressures faced by businesses, particularly in export-oriented industries vital to Zimbabwe's economic recovery.
