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Mangudya was first appointed to the post in 2014, but his term was marred by the bank's decision to introduce the surrogate bond note currency two years later in a bid to end a severe shortage of US dollars and cash.
"The extension takes effect from 1 May 2019, for another five years," Misheck Sibanda, chief secretary to the president and cabinet said in a statement.
Mangudya's appointment had been largely expected after Mnangagwa's spokesman George Charamba said the governor would get a second term.
Zimbabwe is gripped by a severe shortage of dollars that has seen the country struggle to import food and medicines for hospitals.