In a significant economic reform, Zimbabwe has repealed the contentious foreign exchange rule that forced formal businesses to use the official exchange rate when pricing goods and services. This change, confirmed through Statutory Instrument 34 of 2025, marks a major shift after months of confusion.
The European Union Ambassador to Zimbabwe, Jobst von Kirchmann, welcomed the repeal of the contentious foreign exchange rule, stating it’s a significant step toward further liberalizing the foreign exchange market. This move is expected to pave the way for comprehensive debt restructuring and access to international financing. Business leader Busisa Moyo also reacted positively, saying the freedom to price goods and services based on market competition is a step in the right direction, allowing for more market-driven trading in local currency.
The repealed rule had put formal retailers at a disadvantage, forcing them to sell at less competitive prices compared to informal traders who used parallel market exchange rates. With the new rule, businesses can now price goods and services differently, potentially narrowing the gap between formal and informal markets. This change may enable formal businesses to become more competitive, and products could return to supermarket shelves as they compete fairly with the informal market.
The Reserve Bank of Zimbabwe governor initially suggested businesses could set their own USD-to-ZiG exchange rates but later clarified that no business can set its own ZiG rates. Instead, businesses must rely on rates set in the interbank market, determined by foreign currency supply and demand. This clarification aims to bring clarity to the foreign exchange market, which has been subject to volatility and inconsistent policies.
Ordinary Zimbabweans can expect several benefits from this change, including potential price drops as retailers get more value from foreign currency sales. With more products likely to return to supermarket shelves due to fair competition, consumers may enjoy greater choice and stability. However, short-term price fluctuations are possible due to exchange rate volatility. In the long term, the government hopes this reform will stabilize prices, encourage formal business growth, and attract international financial support by aligning Zimbabwe’s policies with global economic standards.
As of April 17, 2025, the exchange rates are:
– 1 USD to ZiG: 26.7994 ZiG (official rate)
– 1 USD to ZiG: 35.0000 ZiG (highest informal sector rate)
– 1 USD to ZiG: 38.0000 ZiG (lowest informal sector rate)
end//..
