Zimbabwe Inflation Eases as Gold-Backed Currency Stabilizes
TLDR
- Zimbabwe's monthly inflation rate decreased to 11.7% in November from 37.2% in October, the first decline in four months, as reported by the Zimbabwe National Statistics Agency.
- The volatility of the gold-backed ZiG currency, introduced in April as Zimbabwe's sixth local currency attempt, led to a 43% devaluation in late September but has eased, with ZiG strengthening by 13% against the dollar this month.
- ZiG currency is now trading at 25.33 per dollar on the central bank's official market and has narrowed its gap on the parallel market to 35-40 per dollar, down from the previous low of 50.
Zimbabwe’s monthly inflation rate slowed to 11.7% in November from 37.2% in October, marking the first decline in four months, according to the Zimbabwe National Statistics Agency.
The volatility of the gold-backed ZiG currency, which caused inflation to spike following a 43% devaluation in late September, has eased.
The ZiG, introduced in April as Zimbabwe’s sixth local currency attempt in 15 years, has strengthened by 13% against the dollar this month, trading at 25.33 per dollar on the central bank’s official market. On the parallel market, it has narrowed its gap, trading at 35-40 per dollar, down from a low of 50.
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Key Takeaways
Zimbabwe’s focus on curbing inflation and stabilizing its currency signals progress toward economic resilience. While the ZiG's recent gains highlight early success, its long-term viability remains tied to careful liquidity management and broader acceptance. Authorities are cautious, delaying plans to make the ZiG the sole currency until economic conditions align. The Reserve Bank of Zimbabwe credits the currency’s stabilization to tighter monetary policies, including a September interest rate hike from 20% to 35%. Finance Minister Mthuli Ncube is expected to announce further measures to encourage ZiG adoption during a budget presentation on Thursday.
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