Reserve Bank of Zimbabwe has issued 2000 more gold coins into the market, a week after issuing the initial batch of the same quantum as demand surged.
The government introduced the gold coins as an alternative for investors to store value amid local currency fluctuations.
In the latest Monetary Policy Committee (MPC) meeting, the Bank said the tight monetary policy stance to stabilize the exchange rate would be buttressed by the favorable uptake of gold coins.
“Additional 2000 gold coins will be released into the market during the week commencing 1 August 2022,”
“A total of 1500 gold coins were sold by the Bank’s agents during the first week of their release into the market, with 85% having been bought in local currency and the balance of 15% in foreign currency.”
The gold coins are currently being sold at US$ 1841.07 or ZWL 863 101.35 using yesterday’s gold PM FIX of US$ 1 753.40.
Demand for gold coins has been growing as investors (both individual and institutional) are desperate to offload funds mainly in the local currency for value preservation.
The Zimbabwe dollar, on the parallel market, is fast approaching the 1000 mark against the USD as it is currently valued at anything between 800 and 950.
This has created a massive discount rate on the gold coins which are still being rated using the official rate of 450/USD. This has become a major concern for economists who are worried about the Bank’s ability to pay for the coins once the holders return.
Meanwhile, the Central Bank is hoping the mopping up of excessive liquidity through the sale of gold coins will bring exchange rate stability and put inflation under control.
Already month-on-month inflation declined from 30.7 percent in June 2022 to 25.6 percent in July 2022.
“The MPC also noted that the disinflation trend will be reinforced by measures the Government was taking to deal with factors that destabilize the foreign exchange market, particularly by reviewing the basis and framework for payments to its suppliers of goods and services in its quest to stabilize the foreign exchange market and enhance value for money.”
The MPC further noted that whilst monthly inflation is expected to continue to decelerate during the outlook period, annual inflation will continue to increase up to September 2022 as a result of the lower base effect in 2021.