Zimbabwe's Reserves Hit $533M But Public Distrust in ZiG Persists
TLDR
- Reserves backing the Zimbabwe Gold (ZiG) currency have reached $533 million, comprising 2.67 tonnes of gold
- Gold production hit a record 36.48 tonnes in 2024, up 21% from 30.10 tonnes in 2023, contributing significantly to foreign reserves
- The reserves are now over three times the local currency in circulation, reflecting strengthened reserve backing
Zimbabwe’s Reserve Bank Governor, John Mushayavanhu, announced that reserves backing the Zimbabwe Gold (ZiG) currency have reached $533 million, comprising 2.67 tonnes of gold (valued at $228 million) and foreign currency.
Gold production hit a record 36.48 tonnes in 2024, up 21% from 30.10 tonnes in 2023, contributing significantly to foreign reserves through royalties and export earnings. Since the ZiG's launch in April 2024, the central bank’s gold holdings have grown from 1.5 tonnes to 2.67 tonnes. Currently, ZiG accounts for 5% of reserve money, totaling ZiG183 million.
The reserves are now over three times the local currency in circulation, reflecting strengthened reserve backing. Despite improved reserves, the ZiG currency has faced public distrust. Many Zimbabweans avoid using it as a store of value due to prior currency instability and primarily use it as small change, with preference for the US dollar dominating.
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Key Takeaways
While Zimbabwe’s increased gold production has strengthened the central bank’s reserves, public confidence in the ZiG currency remains low. The currency’s inability to function as a reliable store of value undermines its acceptance, reflecting broader economic challenges and a legacy of hyperinflation. Efforts to stabilize the ZiG must address trust deficits among Zimbabweans. Without widespread adoption and confidence, the reserve-backed currency risks limited utility, even as gold output and foreign currency reserves improve.
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