HARARE, April 20 – Zimbabwe’s central bank governor said the country’s currency is trading below its implied value, citing the level of reserves supporting the unit.
Governor John Mushayavanhu said the Zimbabwe Gold currency, known as the ZiG, could trade at around 15 per dollar if backed fully by available reserves, compared with its current range of 25 to 28 per dollar.
The ZiG was introduced two years ago as authorities sought to stabilise the currency and contain inflation. Annual inflation stood at 4.4% in March, up from 3.8% a month earlier but significantly lower than levels above 50% when Mushayavanhu assumed office.
The central bank maintained its benchmark interest rate at 35% last month as it assesses the impact of higher global fuel and fertiliser prices. The governor also flagged risks from a potential El Niño weather pattern later in the year, which could affect agricultural output and increase the need for imports.
Zimbabwe’s foreign-exchange reserves total about $1.4 billion, including gold holdings. Gold production rose 8.3% to 9,312 kilograms in the first quarter, generating $843.3 million in revenue, compared with $395.9 million in the same period last year.
Despite recent stabilisation efforts, dollarisation remains widespread, with more than 90% of daily transactions conducted in US dollars, according to industry data.
The economy is projected to grow by 5% this year, compared with a revised expansion of 8% previously, while inflation is expected to remain in single digits.
