ZIMBABWE’S central bank says nearly ZW$4 billion has been realised from the sale of gold coins as the authorities turn to the new asset to mop up excess liquidity which experts blamed for the mounting inflationary pressures buffeting the economy.
The economy is facing rising year-on-year inflation which shot up to 256.9% in July from 191.6% in June.
John Mangudya, Reserve Bank of Zimbabwe governor, in his Monetary Policy Statement presented on Thursday said inflation is expected to continue to decelerate as measures put in place by the central bank and the government to keep inflation under check continue to bear fruit.
However, he said annual inflation could increase in the short term as a result of the lower base effect in 2021 and subsequently decelerate in line with declining month-on-month inflation.
“As at 10 August 2022, 4 475 gold coins had been sold realising ZW$3.7 billion of which 90% was paid in local currency and the balance in foreign currency, and evenly distributed throughout the agents,” Mangudya said.
“The high demand for the gold coins will assist in mopping up liquidity from the market and thus strengthen the demand and enhance the value of the local currency. The Bank shall continue to release additional gold coins into the market on an ongoing basis in line with demand.”
The price of the Mosi-Oa-Tunya coins is determined by the London Bullion Market Association (LBMA) PM Fix gold price plus a margin of 5% to cover the production and distribution costs. The price of the gold coin on the date of initial release, 25 July 2022, was US$1 823.80 or ZW$805 745.35 in local currency.
Fluctuations will be experienced on the US dollar and Zimdollar prices as a result of the movement in the international price of gold and the exchange rate.
Following the resolution by the Monetary Policy Committee on 24 June 2022 to introduce gold coins into the Zimbabwean market as an alternative stable investment product for value preservation, the cebtral bank released the first batch of 2000 gold coins into the market on 25 July 2022.