Gold coins’ sales hit ZW$3,7 billion, 90% sales in local currency

Spread This News

By Alois Vinga  

THE Reserve Bank of Zimbabwe (RBZ) has reported that gold coins’ sales have to date reached ZW$3,7 billion with 90% sales being made in the local currency.

Presenting the Mid-Term Monetary Policy Statement Thursday, RBZ governor John Mangudya said the gold coins.

“As at 10 August 2022, 4475 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.

“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,” he said.

The current figure is a significant increase on the 1,500 gold coins during the first week of their release into the market.

The authorities introduced the so-called Mosi-oa-Tunya coins last month to ease demand for US dollars as a store of value, after a collapse of the Zimbabwe dollar — it has lost more than two-thirds of its value against the greenback this year.

The 22-carat coin is selling for $1,841 but the MPS committed to produce coins of a lesser value going forward.

Against the trends, the central bank anticipates that the coins will go a long way to mop up excess Zim$ cash which has been widely used to fuel the parallel market exchange rates.

The price of the gold 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 gold coin, which is sold with an accompanying bearer certificate, has Liquid Asset Status;  Prescribed Asset Status; can be used as collateral; tradable; and can be bought back after 180 days at the instance of the holder.

Independent economist Victor Bhoroma recently told the media that the  intervention is noble and coupled with positive interest rates would reduce both “speculative borrowing in the economy and money supply growth.”