eBusiness Weekly
Business Writer
The Reserve Bank of Zimbabwe (RBZ) says it will this week introduce into the market additional 2000 gold coins after initial 1500 coins were sold out by the bank’s agents during the first week of their release.
This will bring to 3500 gold introduced into the market so far.
The RBZ introduced the coins a week ago to help cushion corporates and individuals from the negative impact of declining cash values and mop up large sums of Zimbabwe dollars in some bank accounts of corporates and wealthy individuals.
RBZ Governor Dr John Mangudya in a statement of the resolutions of the Monetary Policy Committee (MPC) meeting held on July 29, 2022, said a total 85 percent of the gold coins that were injected into the market were bought in local currency while the balance of 15 percent was bought in foreign currency.
“The MPC resolved to maintain the interest rates at current levels. The tight monetary policy stance would be buttressed by the favourable uptake of gold coins, which were introduced in the economy on July 25, 2022 as an alternative stable financial product for store of value,” he said.
According to the Bankers Association of Zimbabwe (BAZ), the banks have since been overwhelmed by demand from both corporates and individuals.
The gold coins, each holding one troy ounce of gold, are minted at the Fidelity Gold Refineries and are being sold through normal banking channels and Reserve Bank agencies.
Dr Mangudya said that with the month-on-month inflation having declined from 30,7 percent in June 2022 to 25,6 percent in July 2022, the MPC noted that the progressive decline will continue in the outlook period as a result of the tight monetary policy stance being pursued by the Bank.
He said that the MPC also noted that the disinflation trend will be reinforced by measures Government was taking to deal with factors that destabilise the foreign exchange market, particularly by reviewing the basis and framework for payments to its suppliers of goods and services in its quest to stabilise 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,” said Dr Mangudya.
He added that the MPC will continue to review interest rates on a regular basis in line with month-on-month inflation developments.
According to the governor, the benefits of the gold coins will filter down to the ordinary person as it means prices in the economy will stabilise as the exchange rate remains stable and if the price stabilises it will also benefit those that are currently chasing foreign currency for value preservation.
The target of the RBZ is that they will be able to mint lower denomination coins for those with little disposable income.
According to the governor, the country has the capacity to meet demand in the market as a tonne of gold can mint up to 30 000 coins.
Analysts also believe that the coins are a good investment for those that want to lock in value in the long term.
The coins can also be purchased using mobile bank money as the country continues to move along with innovation and ease of doing business.
In order to avoid arbitrage, the Bank wants to have a continuous supply of the coins to the market in order to avoid a stop, start issue in the market.
