Zimbabwe’s local currency, the Zimbabwe Gold, weakened by 2.86% on the parallel market in May, reflecting ongoing pressure from strong demand for the US dollar, according to a new market report by IH Securities.
The slight dip in the official exchange rate, from US$1:26.8193 to US$1:26.9102, underscores the relative calm in formal forex markets, even as the parallel market shows signs of strain.
Meanwhile, the Reserve Bank of Zimbabwe reported a sharp jump in annual ZiG inflation, which rose to 92.1%, marking a 6.4 percentage point increase from the previous month. The central bank anticipates this inflationary trend will persist through September 2025.
On the other hand, the US dollar inflation rate continued to cool. Year-on-year USD inflation eased to 13.9% in May, down from 14.4% in April, while month-on-month figures dipped to -0.3%, led by lower food prices.
IH Securities noted that blended inflation (a mix of USD and ZiG inflation) fell to 0% in April, reflecting a complex inflation environment shaped by multiple pricing systems.
Adding to inflationary pressure is a new government measure enacted through Statutory Instrument 50 of 2025, which took effect on May 9th. The regulation increased the strategic fuel reserve levy—by 28.34% for petrol and 19.1% for diesel—in an effort to protect the country from global fuel market fluctuations.
While the move aims to ensure fuel availability, IH Securities cautioned it could raise business operating costs and contribute to further price hikes.
“The inflation outlook remains fluid,” the firm said, adding that forward pricing strategies and ongoing USD demand are likely to keep pressure on the exchange rate in the coming months.
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