Currencies August 5, 2026 09:41 AM

Zimbabwe Holds Off on Dropping US Dollar Pending Currency and Price Stability

Finance ministry says dual currency system will remain until exchange rates and inflation are judged stable

By Jordan Park
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Zimbabwe will retain a dual currency system rather than immediately phasing out the US dollar, Finance Secretary George Guvamatanga said, citing the need for stable inflation and exchange rates. The government introduced the ZiG in April 2024 and had planned to remove the dollar from everyday use by 2030, but will wait until economic indicators improve. Annual inflation recently eased to 3.2% from 4.7% in June, and authorities aim to raise foreign exchange reserves from 1.6 months of import cover to two months.

Zimbabwe Holds Off on Dropping US Dollar Pending Currency and Price Stability
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Key Points

  • Zimbabwe will continue operating a dual currency system until inflation and exchange rates are judged stable - impacts banking, retail and payments sectors.
  • ZiG was introduced in April 2024 as the country's sixth attempt at a local currency; the government had planned to phase out the US dollar by 2030 - impacts monetary policy and cash management.
  • Authorities aim to raise foreign currency reserves to two months of import cover from the current 1.6 months - impacts trade financing and import-dependent sectors.

Zimbabwe will not move swiftly to end use of the US dollar until key economic indicators show sustained stability, a senior finance official told business leaders on Wednesday.

Speaking at a budget review meeting in Harare, Finance Secretary George Guvamatanga said the government intends to keep the current dual currency arrangement in place until the country records a stable exchange rate and stable inflation.

"We are not rushing to a single currency until we have a stable exchange rate, stable inflation," Guvamatanga said.

The government introduced the ZiG currency in April 2024. That launch represents the sixth attempt to establish a working national currency after repeated episodes of runaway price growth. At the time of its introduction, officials had outlined a longer-term plan to phase out use of the US dollar in everyday transactions by 2030 and make the ZiG the sole legal tender. The ZiG is described as bullion-backed in earlier policy statements.

Recent inflation data shows a marked reduction from very high levels recorded earlier in the decade. Annual consumer inflation eased to 3.2% last month from 4.7% in June. The rate had peaked at 786% in May 2020.

Guvamatanga also said the administration is targeting an increase in the nation's foreign currency reserves. The goal is to lift import cover to two months from the present level of 1.6 months, a move the finance secretary framed as part of efforts to underpin stability in the exchange rate.

The statements at the Harare meeting underscore a cautious approach to currency reform: authorities prefer to maintain a dual currency regime until they see sustained improvements in both price stability and exchange-rate conditions. Business leaders at the budget review were the audience for the finance secretary's remarks.

For now, the timetable for removing the US dollar from day-to-day transactions remains contingent on future economic outcomes rather than fixed to the previously discussed 2030 horizon. Officials will monitor inflation and exchange-rate developments as they consider the next steps.


Methodology note: This report is based on comments made by the finance secretary at a budget review meeting and on the most recently reported inflation and reserves figures cited by the ministry in those remarks.

Risks

  • Uncertainty over the path to stable inflation and exchange rates could delay full adoption of the ZiG - poses risks for financial institutions and businesses relying on predictable currency conditions.
  • Foreign reserve shortfalls relative to the two-month target could leave importers and markets exposed to exchange-rate volatility - affects trade and supply-chain dependent industries.
  • If inflation momentum changes, plans to move to a single currency may need further postponement - creates policy and operational uncertainty for payments systems and cash management.

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