THE rise in gold reserves by a phenomenal 198,7 percent to 4,48 tonnes in two years, the fastest-growing bullion reserve buffer in Africa, has bolstered the central bank’s efforts to build public trust and confidence in the domestic currency.
The apex bank has already made giant strides towards anchoring long-term confidence in the unit through durable inflation and exchange rate stability.
President Mnangagwa confirmed the new gold reserve holdings when he inspected the central bank vaults last week. He said the strategic initiative to establish a gold-backed domestic currency was producing substantial outcomes.
“These reserves are tangible assets that underpin our monetary sovereignty, rather than mere numbers,” the President said.
Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mushayavanhu told journalists during the inspection by President Mnangagwa that the country now has over US$1,4 billion backing Zimbabwe Gold (ZiG).
“And that US$1,4 billion is predominantly composed of gold reserves, and we are continuing to grow it,” Dr Mushayavanhu said.
The latest International Financial Statistics and World Gold Council figures also show that Zimbabwe is now ranked 11th in Africa for official gold holdings, with bullion accounting for nearly 48 percent of the country’s total reserve assets.
The increase comes at a critical stage for monetary authorities as they work to entrench ZiG as a stable currency following a long period of economic volatility marked by exchange rate instability, high inflation and huge parallel market premiums.
Apart from the inspection by President Mnangagwa, the gold reserves are verified by independent auditors BDO to build public trust.
Zimbabwe’s reserve accumulation is important because gold acts as a financial buffer supporting ZiG stability, limiting the impact of speculative pressure and improving confidence in the broader economy.
In practical terms, reserves are national savings held by a central bank in the form of gold, foreign currency and other reserve assets that can be used to cushion the economy during periods of external stress.
The central bank uses gold to back ZiG, given its status as a reliable store of value.
Bullion is rare, durable and universally accepted, which secures long-term purchasing power.
The ZiG currency, launched in April 2024, is a “structured currency” that uses physical gold reserves and foreign currency to anchor its stability against the volatility that plagued previous Zimbabwean currencies.
When the then-local currency, the Zimbabwe dollar, collapsed in 2008, attempts to reintroduce the unit, including bond notes (2016), the RTGS dollar (2019) and the Zimbabwe dollar (2019-2024), failed primarily due to lack of public confidence and unrestrained money creation by the previous central bank regime.
Economist Mr Malone Gwadu said the increase in reserves, combined with lower inflation and reduced exchange volatility, was helping reinforce confidence in the currency.
“Well, I think the increase in the gold reserves to US$1,4 billion equivalent, coupled with reduced inflation levels to single digits, as well as amelioration of exchange volatility of the ZiG and the US dollar, is a cocktail of success factors for the currency,” he said.
“They are complementing each other in the sense that the increase in reserves is reducing exchange instability and inflation rates in a sustainable manner, while also exuding economic confidence.”
Mr Gwadu said the reserve build-up was also helping stabilise pricing patterns across the economy.
“The prices of products in the economy are supposed to be stable because inflation and exchange rates are largely under the leash now because of the tight monetary policy stance, coupled with reserves that can complement and provide defensive capabilities to the currency in the case of any volatilities or threats to stability,” he said.
Since he assumed office as RBZ governor in March 2024, Dr Mushayavanhu has preached the need for a return to basics, famously declaring, “not under my watch” will the bank repeat past mistakes.
The governor stressed that he does not believe in quasi-fiscal activities and that his mandate, as spelt out in the RBZ Act, is to ensure monetary discipline and to maintain low inflation.
“I have no intention, whatsoever, to do other people’s jobs. I’ll do my job,” he said shortly after his appointment.
The ZiG gold-backing means the value of the currency in circulation should always be fully covered or within the bounds of the value of the physical gold and foreign exchange reserves held by the central bank.
This restriction will prevent Zimbabwe from relapsing into the sort of money-printing mode of yesteryear by the central bank, driven by the need to finance Government deficits, as the economy buckled under the weight of low production and Western sanctions.
Backing the currency with gold and foreign currency creates a buffer that restricts excessive printing of the domestic currency beyond what the economy requires to support optimal transacting, thereby reducing currency volatility and inflation surges.
Printing too much money reduces its value, leading to high inflation or hyperinflation because more money would chase the same amount of goods, causing prices to rise.
This devalues savings, lowers purchasing power and can destroy economic stability.
By pegging the currency to a “safe-haven” asset, the Government aims to restore public trust and confidence, ensuring that every unit of ZiG is fully covered by gold in the RBZ vaults, encouraging use of the currency for transactions and savings.
This augurs well for Zimbabwe’s ultimate goal of reintroducing a mono-currency regime, once all conditions precedent have been achieved, including durable stability, low inflation and import cover of three to six months.
ZiG’s share of transactions has increased from 26 percent at inception in 2024 to 30 percent as trust in the currency has grown.
Unlike pure fiat currencies, the creation of ZiG is intended to be constrained by the growth of reserves, specifically through royalties and export surrenders.
ZiG, which launched with a market-determined exchange rate, has shown durable stability and currently trades around 25 ZiG-26 ZiG per US dollar.
The backing has resulted in significant disinflation, with annual inflation falling from over 90 percent in late 2025 to single digits — 4,8 percent — by April 2026.
Zimbabwe’s total reserves are now estimated to cover roughly 1,6 months of imports, meaning the authorities have latitude to continue financing critical imports such as fuel, medicines and industrial inputs for that period without needing to replenish the forex accounts.
This is a key metric for assessing a country’s external sector stability and its ability to absorb “shocks” in international trade.
For a country whose economy has long been highly sensitive to exchange rate swings, economists say stronger reserves can help anchor inflation expectations and calm volatility.
Before the introduction of ZiG in 2024, Zimbabwe’s inflation environment had become increasingly unstable, with annual inflation surging into triple digits at various stages while the Zimbabwe dollar suffered steep depreciation on both official and parallel markets.
The widening gap between official and parallel exchange rates frequently triggered rapid price increases as businesses rushed to hedge against currency losses.
ZiG, underpinned by growing confidence, tighter monetary policy, restrained liquidity growth and stronger reserve backing, has anchored low inflation and eliminated exchange rate volatility.
In a sign of its commitment to low inflation and tight liquidity, RBZ has maintained its bank policy rate, which guides interest rates, at a steep 35 percent, to discourage speculative borrowing and money creation.
The gap between the official and parallel market exchange rates has narrowed to 20 percent compared to the sharp distortions seen before the ZiG era.
Unlike fiat currencies, gold cannot be printed and is generally less exposed to geopolitical risks and global monetary shocks.
Economist Dr Farai Mabika said Zimbabwe’s decision to increase gold reserves reflected an attempt to strengthen monetary credibility using hard assets.
“Gold reserves help improve confidence because they provide a tangible backing structure to the monetary system,” he said.
“In Zimbabwe’s case, where confidence in local currencies has historically been fragile, reserve accumulation becomes psychologically and economically important.”
He said stronger reserves could help reduce volatility in both inflation and exchange rates if supported by disciplined monetary management.
“When markets believe the central bank possesses adequate reserves, speculative behaviour tends to reduce because there is greater confidence in the authorities’ capacity to support the currency,” Dr Mabika said.
He cautioned that reserves alone would not guarantee long-term stability.
“Reserve growth must move together with fiscal discipline, export growth, productivity and policy consistency. Gold is an important buffer, but it cannot replace broader economic fundamentals,” he said.
Zimbabwe’s latest national reserve figures also place the country within a broader continental shift among African central banks towards strengthening bullion holdings.
According to the latest data, Algeria remains Africa’s largest gold holder with 173,6 tonnes, followed by Libya at 146,7 tonnes, Egypt at 129,5 tonnes and South Africa at 125,5 tonnes.
Nigeria holds 21,6 tonnes while Ghana possesses 19,2 tonnes.
Analysts say the renewed emphasis on gold reserves globally is partly linked to rising geopolitical uncertainty, inflation concerns and growing efforts by countries to diversify from excessive dependence on the US dollar.
Banker Mr Raymond Madziwa said Zimbabwe’s reserve build-up would likely be viewed positively by investors and financial markets.
“Reserve accumulation sends an important signal regarding monetary discipline and financial preparedness,” he said.
“Investors and markets generally gain confidence when a country demonstrates a stronger capacity to defend its currency and absorb external shocks.”
Mr Madziwa said gold reserves were particularly important for economies attempting to stabilise relatively young currencies.
“In the case of ZiG, the reserve position becomes part of the confidence framework because markets want assurance that the currency is supported by real assets and prudent monetary management,” he said.
Still, economists say Zimbabwe’s reserve cover remains below the conventional three-month benchmark, often regarded internationally as a comfortable minimum level.
That means the authorities will likely continue focusing on expanding reserves through higher gold deliveries, export growth and improved foreign currency generation.
Despite the challenges, analysts say the latest reserve figures represent an important milestone in Zimbabwe’s efforts to rebuild monetary credibility.
And in a world where central banks are once again turning to bullion as a strategic financial shield, Zimbabwe’s growing gold stockpile is increasingly becoming central to the story of ZiG itself.-herald
