Zimbabwe’s central bank confirmed that it would begin selling gold coins in July as a store of value to tame the severe runaway inflation that has weakened the local currency extensively.
John Mangudya, the central bank governor said in a statement on July 4 that the coins will be available in the market for sale from July 25 in local currency, US dollars, and other foreign currencies. They will be sold at a price inspired by the prevailing international price of gold and the cost of production.
The “Mosi-oa-tunya” coin, named after Victoria Falls, can be changed into cash and then traded locally and internationally, as explained by the central bank. The gold coin will have one troy ounce of gold and will be sold by local banks and Fidelity Gold Refinery.
Gold coins are mostly used by investors internationally to hedge against inflation and wars. In the past week, Zimbabwe doubled its policy rate to 200% from 80% and outlined its plans to make the United States dollar legal tender for the coming five years to boost confidence.
Increasing inflation in the southern African state has been piling excessive pressure on a population that is already struggling with shortages and stirring bitter memories of economic chaos years ago under Robert Mugabe’s near four-decade rule.
Yearly inflation that hit nearly 192% in June, cast a huge shadow over President Emmerson Mnangagwa’s bid to revitalize the economy.
Zimbabwe abandoned its inflation-stricken dollar in 2009, opting to use foreign currencies, primarily the US dollar. Later in 2019, the government reintroduced the local currency but it rapidly lost its value once more.