Zimbabwe has officially eliminated exchange rate controls that authorities used for decades to arrest and fine individuals and businesses operating with unofficial rates, allowing the Zimbabwe Gold currency to float freely, Business Daily reported on July 3.
The Reserve Bank of Zimbabwe announced the decision through a statutory instrument, marking the end of controls imposed over the past two decades to force the use of local currency.
RBZ Deputy Governor Innocent Matshe said: "We want the market players to drive activity, not the central bank or its agents. The heavy-handedness is gone. You will never see it again."
The central bank previously arrested traders through its financial intelligence unit and police for pricing goods and services more than 10% above official exchange rates.
Whilst the measures aimed to stabilise the economy, they suppressed market forces and created an unpredictable and often hostile operating environment.
The International Monetary Fund (IMF) has repeatedly urged authorities to fully liberalise the currency market. In a June 18 release, the lender reiterated calls for "elimination of undesirable exchange restrictions".
The liberalisation aims to reduce pricing distortions, increase competitiveness, and harmonise the formal and informal sectors, which had previously operated under a dual exchange rate system.
While the RBZ maintains that the ZiG remains gold-backed and stable, some analysts note that the shift to a floating exchange rate raises questions about the currency’s continued asset backing and exposes it to market volatility.
The move comes as Finance, Economic Development, and Investment Promotion Minister Professor Mthuli Ncube officially repealed a regulation introduced in May 2024 to settle the exchange rates, seen as part of a move towards more normal economic conditions.