Zimbabwe to introduce gold coins as local currency tumbles

Zimbabwe’s central bank on Tuesday said it would start selling gold coins as a store of value to tame runaway inflation, which had considerably weakened the local currency. The central bank governor John Mangudya said in a statement that the coins would be available for sale from July 25.

According to him, the sale will be in local currency, U.S. dollars and other foreign currencies at a price based on the prevailing international price of gold and the cost of production. The central bank said the “Mosi-oa-tunya’’ coin, named after Victoria Falls could be converted into cash and be traded locally and internationally.

It said that the gold coin would contain one troy ounce of gold and would be sold by Fidelity Gold Refinery, Aurex and local banks. Gold coins are used by investors internationally to hedge against inflation and wars. Earlier, Zimbabwe more than doubled its policy rate to 200 per cent from 80 per cent and outlined plans to make the U.S. dollar legal tender for the next five years to boost confidence.

Soaring inflation in the southern African country has been piling pressure on a population already struggling with shortages and stirring memories of economic chaos years ago under veteran leader Robert Mugabe’s near four-decade rule.

Annual inflation, which hit almost 192 per cent in June, cast a shadow over President Emmerson Mnangagwa’s bid to revitalise the economy. Zimbabwe abandoned its inflation-ravaged dollar in 2009, opting instead to use foreign currencies, mostly the U.S. dollar. The government reintroduced the local currency in 2019, but it has rapidly lost value again. (Reuters/NAN)