Zimbabwe Introduces Gold Coins As Local Currency Tumbles

Zimbabwe’s central bank said this month it will begin selling gold coins as a store of value to curb runaway inflation, which has significantly weakened the local currency.

Central bank governor John Mangudya said in a statement Monday that the coins will be available for sale from July 25 in local currencies, US dollars and other foreign currencies at a price based on the prevailing international gold price and production costs.

The central bank said the coins’ purpose would be “as an instrument that will enable investors to store value”.

The “Mosi-oa-tunya” coin, named after Victoria Falls, can be converted to cash and traded locally and internationally, the central bank said.

The gold coin will contain one troy ounce of gold and will be sold by Fidelity Gold Refinery, Aurex and local banks.

Gold coins are used internationally by investors to hedge against inflation and wars.

Australia is one of the countries that has already launched gold coins.

The Perth Mint began production of the Australian gold nugget, also known as the golden kangaroo, in 1986.

Last week Zimbabwe doubled its key rate from 80 percent to 200 percent and outlined plans to make the US dollar legal tender over the next five years to boost confidence.

Rising inflation in the South African country has put pressure on a population that had struggled with deficits for years and brought back memories of the economic chaos under the nearly four-decade rule of veteran leader Robert Mugabe.

Annual inflation, which stood at nearly 192 percent in June, cast a shadow over President Emmerson Mnangagwa’s drive to revive the economy.

Zimbabwe abandoned its inflation-ridden dollar in 2009 and opted instead to use foreign currencies, primarily the US dollar.

The government reintroduced the local currency in 2019, but it quickly depreciated again.

ABC/Reuters

Leave a Comment