ZIMBABWEAN GOVERNMENT INTRODUCES GOLD COINS TO COMBAT INFLATION

Tue 27 July 2022:

In a bid to curb an inflation spike that has eroded the country’s unstable currency, Zimbabwe has launched gold coins to be sold to the public,

 The country’s Reserve Bank of Zimbabwe, which distributed 2,000 coins to commercial banks, announced the action on Monday.

The central bank stated in its announcement that the coins, known as Mosi-oa-Tunya, which in the Tongan language stands for Victoria Falls, “will have liquid asset status,” which means they “will be able to be easily converted to cash and will be tradable locally and internationally,” and that they “may also be used for transactional purposes.”

After 180 days from the date of purchase, holders can only exchange them for cash.

Individuals or companies will be able to buy them from authorised outlets such as banks and keep them at a bank or take them home, according to the announcement. Foreigners can only buy the coins in foreign currency.

The first batch was minted outside the country but eventually they will be produced locally, said John Mangudya, the governor of the Reserve Bank of Zimbabwe.

He added the 22-carat coins can be used for purchases in shops, depending on whether the shop has enough change, as well as security for loans and credit facilities.

Their price will be determined by the international market rate for an ounce of gold, plus five percent for the cost of producing the coin. At the time of the launch on Monday, the cost of one Mosi oa Tunya was $1,824.

After seeing their savings destroyed by hyperinflation in 2008, people in Zimbabwe have little faith in the country’s currency. Inflation increased sharply from 132 percent in May to 191.6 percent in June.

Zimbabwe is experiencing an economic crisis marked by a sharp decline in manufacturing output, a rapidly devaluing local currency, and 90 percent unemployment.

Internationally, gold coins are used in countries such as China, South Africa and Australia to hedge against inflation and as an investment opportunity.