Africa-Press – Zimbabwe. FINANCIAL services firm, IH Securities, says the Zimbabwe Gold (ZiG) depreciated by 2,86% on the parallel market in May as demand for the United States dollar continues.
Last week, the central bank said it is now closely monitoring inflation after the annual ZiG rate accelerated by 6,4 percentage points last month to 92,1%. The bank projects the upward trajectory to continue through to September.
Meanwhile, the year-on-year US dollar inflation rate decelerated to 13,9%, a 0,5 percentage points decline from April, showing that high greenback pricing remains stable.
These inflation statistics indicate continued currency volatility, though the parallel forex rate swings remain in the single-digit bracket.
“The official exchange rate opened the month of May at US$1:26,8193 and depreciated slightly to US$1:26,9102,” IH Securities said in its new May market report.
“The parallel market rate depreciated by 2,86% on a month-on-month basis. However, the parallel rate has remained stable amid sustained tight liquidity conditions.”
IH Securities said month-on-month US-dollar inflation slowed down to -0,3% in May, with food being the biggest contributor.
“Annual US$ inflation slowed to 13,95% from the 14,4% registered in April,” it said.
“Meanwhile, month-on-month ZiG inflation edged up from 0,6% to 0,9%. As a result, aggregate blended inflation for April shed 0,3 percentage points to 0%.”
IH Securities noted that the likely outlook for inflation remained fluid.
“Notably, the Zimbabwean government increased the strategic fuel reserve levy in a bid to stabilise fuel supply and shield the country from global market fluctuations under Statutory Instrument 50 of 2025 (SI 50 of 2025), which went into effect on the 9th of May 2025,” IH Securities added.
“This marks a 28,34% increase for the petrol levy and 19,1% for the diesel levy compared to the previous year, which is likely to increase costs of doing business by inducing some inflation.”
Such moves are expected to continue exerting pressure on the exchange rate, as demand for the greenback will continue to remain strong, as well as forward pricing mechanisms to cover any shortfalls.
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