RBZ Reports Low Inflation and Rising Reserves in First Quarter

By Tinomudaishe Muzanenhamo

The Reserve Bank of Zimbabwe says the economy showed further signs of stability in the first three months of 2026, helped by low inflation, a steady exchange rate and a sharp rise in foreign currency reserves.

In its latest quarterly snapshot, the RBZ said the Zimbabwe Gold (ZiG) currency recorded single-digit annual inflation for the first time in more than 30 years.

Annual inflation stood at 4.1% in January, before easing to 3.8% in February and rising slightly to 4.4% in March.

The bank said this was the result of what it described as prudent monetary policy with month-on-month inflation averaging just 0.2% during the quarter.

The official interbank exchange rate remained broadly stable at around ZiG25 to the US dollar while the premium on the parallel market stayed below 20% according to the report.

The RBZ also said reserves backing the local currency rose significantly reaching US$1.4bn by 31 March.

It said that amount was around six times the level of ZiG reserve money and nearly twice the value of ZiG deposits held in the banking sector.

The increase was supported by a 54.1% rise in foreign currency receipts which climbed to US$4.97bn in the first quarter up from US$3.22bn during the same period last year.

Export earnings accounted for 71% of inflows driven by strong tobacco sales and favourable international prices for gold, platinum group metals and lithium.

During the quarter, the central bank also launched a nationwide campaign ahead of the release of its upgraded Big 5 ZiG banknote series.

It said more than 1.5 million people were reached through awareness programmes held at 3 783 centres across all 64 districts.

According to the report businesses and members of the public said they were ready to begin using the new notes.

The consultations also produced calls for some services including fuel purchases and passport fees to be payable in local currency.

RBZ Governor Dr John Mushayavanhu said that as reserves continue to grow towards the recommended three-to-six-month import cover threshold, Zimbabwe would move closer to supporting wider use of the local currency for key imports.

The new notes were officially introduced into circulation on 7 April.

The central bank also said the government had continued its policy of avoiding direct financing of public spending through the RBZ which it described as a key pillar of monetary discipline.

Despite global tensions including the US-Israel-Iran conflict and rising oil prices, the bank kept its policy interest rate unchanged at 35% during the March Monetary Policy Committee meeting.

The RBZ said the move was intended to limit inflationary pressures.

Although a mid-season dry spell affected agriculture, the bank maintained its economic growth forecast for 2026 at 5%.

It also projected that the current account would improve from a deficit of US$19.7m in the first quarter of 2025 to a surplus of more than US$590m in the same period this year.