Expert says smaller gold coins will absorb inflation induced by bonus payments

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By Alois Vinga

THE introduction of smaller gold coins by the Reserve Bank of Zimbabwe (RBZ) is expected to help absorb the inflationary pressures likely to be triggered by the year -end bonus payments induced shocks, economist Persistence Gwanyanya has said.

The remarks come two days after banks started the 4,500 batch of gold coins released this week.

Distribution of the smaller coins to banks across the country started late last week.

Speaking on the latest intervention, economist Gwanyanya who also sits in the RBZ Monetary Policy Committee (MPC) expressed optimism.

“To contain Zim$ volatility expected from bonus payments, the central bank has introduced smaller denominations of gold coins in the range of 1/10; 1/4 and 1/2 ounce,” he said.

“The coins are seen as supporting currency stability and offer a reliable value preservation avenue.

“Now most of us have access to the gold coins, thanks to RBZ for fulfilling its promise which is to entrench stability.”

Commenting on the possibility of reducing the existing 200% interest rate, Gwanyanya said the purpose of the measure is not yet done.

“RBZ shall be guided by projected inflation on interest rate decision. Projected average inflation for the next 12 months has to be below 200% for one to reasonably expect the interest rates to be lowered,” he said.

Meanwhile, the RBZ Foreign Exchange Auction this week allotted US$13 million with a huge chunk of it going towards supporting the industrial productivity cause.

A trading update released at the close of business shows that a total US$11,7 million was allotted on Main Auction platform  with a huge chunk going towards supporting the productivity cause.

Raw materials received US$5 million, machinery and equipment US$1, 7 million, consumables US$1,125 million, services US$1, 6 million, retail and distribution US$609 479, pharmaceuticals and chemicals US$811 466, paper and packaging US$710 141.

On the Small to Medium Enterprises platform, raw materials needs were supported to the tune of  US$437 588, machinery and equipment US$483 860 and consumables US$120 689 among other pertinent needs.