• ZiG gained 1.11% last week before opening 31 August at ZiG26.664/US$
• The official rate was virtually unchanged in August, while the parallel premium averaged 20.7%
• Low inflation continues alongside restrictive credit, liquidity absorption and stronger foreign-currency buffers

Harare- The Zimbabwe Gold opened on 31 August 2026, the last day of the month at ZiG26.6640 per US dollar, giving back part of the appreciation recorded during the previous week after closing Friday at ZiG26.4987.

The currency had started last week at ZiG26.7950 on 24 August and strengthened by approximately 1.11% between Monday and Friday, its strongest full Monday-to-Friday appreciation so far in 2026. Today’s opening leaves the ZiG about 0.49% firmer than the previous week, despite weakening 0.62% from Friday's close.

The wider August movement was considerably narrower. ZiG closed July at 26.6845/US$ and ended 31 August at 26.6640, an appreciation of only 0.08% month to date. From the first August observation of ZiG26.6703, the currency moved by less than 0.03%. The official rate averaged approximately ZiG26.606/US$ during August, trading between 26.4933 and 26.7950.

The year-on-year position is similarly contained. Against ZiG26.7548/US$ on 29 August 2025, the nearest comparable business-day observation, the currency is around 0.34% stronger. The year-to-date comparison remains weaker because ZiG ended December 2025 at 25.9807/US$. The 31 August rate therefore represents depreciation of approximately 2.63% since the beginning of 2026.

The official exchange rate has consequently spent much of 2026 moving inside a remarkably tight corridor. The latest movement continues the configuration seen through July, when RBZ reported an average interbank rate of about ZiG25.93/US$ for the first seven months and attributed stability to foreign-exchange inflows, reserve accumulation and intervention in the formal currency market.

August inflation reinforces the domestic price side of that performance. ZiG inflation slowed to 0.10% month on month and 2.89% year on year, while inflation measured in United States dollars stood at 0.01% monthly and 3.13% annually. Annual ZiG inflation has therefore moved below USD inflation, extending the disinflation recorded since the beginning of the year.

Exchange-rate convergence has progressed more slowly. The parallel market remained around ZiG32/US$ throughout August, while the recorded premium stayed between 20% and 21% and averaged approximately 20.7%. It ended the month at 21%, compared with 20% at the end of July and 23% around the same period last year.

The premium therefore remains materially above the approximately 15% level cited by the Reserve Bank for the first seven months of the year. The difference between the two measurements requires some caution because parallel-market prices can vary by transaction size, location and settlement method. The August series nevertheless maintained a persistent premium above 20%, leaving a visible distance between the interbank valuation of ZiG and the rate used outside the formal market.

That gap is increasingly useful in assessing the character of the current stability. Consumer prices are barely moving, the official exchange rate is largely unchanged and the parallel rate itself has remained around ZiG32. What has not yet occurred is sufficient convergence between the two currency markets.

Liquidity control remains central to that configuration. The latest detailed RBZ monetary data put the domestic ZiG reserve-money stock at ZiG6.60 billion at the end of June, up from ZiG5.31 billion in December 2025. That represents an increase of roughly 24% during the first half. The Q2 position remained below the ZiG7.33 billion ceiling agreed with the IMF, while annual growth in the ZiG component of reserve money slowed to 41.93% from 279.74% a year earlier. Aggregate reserve-money growth slowed to 39.35% from 243.94%.

The increase has so far produced limited exchange-rate transmission because a large share of liquidity entering the financial system has been withdrawn through other channels.

Government expenditure injected ZiG42.3 billion between the beginning of the year and 4 August, while RBZ purchases of export surrender proceeds injected another ZiG32.8 billion. Revenue collections removed ZiG46.1 billion and Reserve Bank foreign-currency sales absorbed ZiG26.9 billion. After other transactions, the net injection was around ZiG4 billion. NNCDs stood at ZiG7.7 billion in early August, with the ZiG-denominated term-deposit facility providing a further mechanism for absorbing liquidity.

Banks are carrying another part of the monetary restraint. Statutory reserves remain at 30% on demand and call deposits and 15% on savings and time deposits, for both local and foreign currencies. The Bank Policy Rate is still 30%, despite annual ZiG inflation falling to 2.89%. That leaves a 27.1 percentage-point gap between the policy rate and current annual inflation before commercial-bank margins are added.

RBZ has already acknowledged that lending rates remain high enough to price productive sectors out of parts of the formal credit market. The Targeted Finance Facility provides some relief at a 15% bank funding rate and a maximum 25% on-lending rate, but its ZiG1.2 billion envelope remains small relative to the broader financing requirements of the economy.

The exchange-rate outcome therefore has a financing cost. Businesses are operating in a low-inflation environment while paying nominal borrowing rates designed to maintain a much tighter liquidity position. The longer that gap persists, the greater the importance of distinguishing currency stability from the availability of affordable working capital.

Foreign-currency supply provides the second major support. Zimbabwe received US$10.72 billion in foreign-currency inflows during the first half, up 47.8% from US$7.25 billion a year earlier. Payments amounted to US$7.30 billion, leaving a substantial positive flow through the external account. The current-account position improved to an estimated US$1.3 billion, supported by remittances and stronger mineral receipts.

Gold remains particularly important within that structure. Strong international prices and rising domestic production have increased the amount of foreign exchange entering the economy through the mineral sector. Tourism and remittances add flows that are less directly tied to mineral production, broadening the pool available to finance imports and formal foreign-exchange demand.

The RBZ has converted part of those inflows into reserves. Foreign-currency reserves reached US$1.7 billion at the end of July, equivalent to 1.7 months of import cover. Precious-mineral royalties received in kind and the allocation of five percentage points from the 30% export surrender requirement have supported the reserve accumulation. RBZ estimates that the reserve stock now covers the ZiG deposit base almost 1.5 times and reserve money approximately six times.

The reserve position provides meaningful backing relative to the domestic monetary stock, although the external buffer remains below the minimum required for the longer-term currency transition. The mono-currency framework requires at least three months of import cover, leaving the current 1.7 months well short of that threshold.

Fiscal policy creates the more complicated part of the currency outlook. Treasury's own debt accounts show domestic expenditure arrears to service providers reaching US$1.361 billion at the end of 2025, compared with only US$34 million a year earlier. Another US$299 million was recorded as mining-house arrears. Road construction, dams, water projects and agricultural input programmes accounted for 77.3% of the expenditure arrears being audited.

Those unpaid obligations should not be treated as a deliberate monetary-policy instrument. Their economic transmission still matters for ZiG. Money that Treasury owes contractors and suppliers has not yet become available liquidity on those companies' balance sheets. Companies instead finance salaries, suppliers and working capital while waiting for settlement.

Payment of the arrears would repair private-sector liquidity, but large settlements introduce another monetary consideration. If significant ZiG obligations are released faster than liquidity can be absorbed or foreign-currency supply grows, part of that money could migrate into foreign-exchange demand. Treasury and RBZ therefore face a sequencing test between normalising Government obligations and preserving the monetary conditions that have kept the currency within its present range.

Outlook and Market Positioning

ZiG enters September with an official exchange rate of 26.6640/US$, annual inflation below 3%, reserve money within the IMF programme ceiling and foreign-currency reserves at US$1.7 billion. The formal currency market has absorbed a 24% increase in local reserve money since December without a material depreciation during August.

The parallel premium remains the earlier market test. At approximately 21%, it has fallen substantially from the 35% recorded at the end of 2025 but has stopped converging around the 20%-21% range through August. A movement towards 15% would place private-market pricing closer to the official valuation without requiring a large adjustment in the interbank rate.

Reserve money provides the second measure. The current configuration can accommodate moderate monetary expansion while statutory reserves, NNCDs, term deposits, tax collections and FX sales continue absorbing liquidity. A reduction in those absorption mechanisms alongside faster reserve-money growth would materially change the amount of ZiG competing for foreign currency.

The third variable is the external account. H1 foreign-currency receipts of US$10.72 billion provide a strong starting position. Gold production, commodity prices, remittances and tourism receipts need to preserve a sufficient foreign-currency surplus through the second half for reserves to advance from 1.7 months towards the three-month threshold.

Fiscal arrears add a fourth measurement that was less visible earlier in the year. Government needs to settle contractors, exporters and other creditors without producing an abrupt liquidity expansion. Progress can therefore be measured through the stock of arrears, the currency in which they are settled and the extent to which those payments subsequently transmit into bank deposits and foreign-exchange demand.

The next stage of adjustment lies in narrowing the remaining market premium while allowing credit conditions and Government payment cycles to normalise without reopening exchange-rate pressure.

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