The Zimbabwe Federation of Industry (CZI) has said that current ZWG inflation trends are not holding hands with market interventions.
Industry lobby groups also denounced the decision by the authorities, resulting in a decline in the value of ZWG currency, leading to an annual inflation rate for high local currency.
The Reserve Bank of Zimbabwe (RBZ) accepted the ZWG currency in April 2024, presenting it as the country’s final solution to the decades of currency problem. At the start, Dr. John Mushayavan, governor of the RBZ, described ZWG as both a mineral and a supplementary currency for foreign currency reserves.
About five months later, ZWG suffered severe market bruises against US$ in both parallel and formal markets, forcing them to order a 43% devaluation overnight from the central bank.
With its latest inflation tracker, CZI criticized the ZWG annual inflation rate of 85.7% in April 2025. This condemned the RBZ’s devaluation order.
“High ZWG inflation primarily reflects the cumulative shock that promoted monthly inflation in 2024. A key factor was the devaluation of the exchange rate in September 2024, which significantly increased the ZIG Consumer Price Index (CPI), resulting in an increase in annual inflation compared to the levels in April 2024,” the industry group said.
According to CZI, high Zig annual inflation poses challenges for businesses, particularly due to its impact on interest rates. To achieve a positive real interest rate, the lending rate must be set at about 85%, making borrowing difficult for businesses.
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“On the other hand, interest rates below inflation can encourage speculative borrowing. Effective monetary policy requires a delicate balance to mitigate these negative effects,” the industry said.
The business group said that as a result, the parallel market premium began to show an upward trend on April 17, 2025, as ZWG was depreciated in the parallel market, despite still being stable in the official market.
By comparing the periods from March 1-29, 2025 and April 1-29, 2025, CZI claims that premiums increased slightly from an average of 25% to 28%, respectively.
“The rise in parallel market premiums distorts the price signal for both businesses and consumers. A recent announcement was expected that ZWG would absorb the pressure to depreciate, as ZWG owners can recognize higher value by purchasing gold coins during periods of rising gold prices.
“The expectations were therefore that the premiums in the parallel market would shrink rather than actually increase,” the industry added.
