RBZ says 10,400 gold coins sold to date, projects 50% annual inflation rate by June 2023

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By Alois Vinga

A total of 10 400 gold coins have been sold to date, with companies dominating the buyers list in a development which has gone a long way in mopping up excess liquidity, Reserve Bank of Zimbabwe (RBZ) has reported.

The gold coins were introduced as a measure to provide the market with an alternative investment option as opposed to purchasing the greenback which fuelled exchange rate instability.

Since their inception, companies and individuals with excess Zim$ have purchased the coins leaving the parallel market starved with very little cash to fuel higher exchange rates.

Addressing legislators at the ongoing parly’s 2023 Pre-Budget Seminar, RBZ governor, John Mangudya revealed that a significant chunk of gold coins had been sold.

“As at the 14th of October last week, 10 400 gold coins of one ounce had been purchased, mopping ZW$10 billion which was otherwise going to chase foreign currency.

“This has led to stability in foreign exchange. All the gold coins are being sold at the official exchange rate. In terms of numbers 25% of the gold coins were purchased by individuals and 65% by corporations as they moved to store value for their customers,” said the governor.

Mangudya said the product has worked well and tabled plans to introduce the 10th quarter, half ounces of gold coins by mid November.

Speaking on the exchange rate, Mangudya anticipated a sustained movement towards convergence underscoring that the current gap between the two rates is in line with internationally accepted 15% threshold.

“Our outlook for inflation is very positive, we reached a peak of 30,7% in the second half of 2022 to our great disappointment. Measures have led to a decline in inflation to 3,5% in December.

“We are expecting inflation to continue to go down to between 3% and 5% and in October we are expecting inflation to be lower than that due to the measures that have been taken.

If this continues to happen we will review the interest rates after December in order to contain the downside risks of high interest rates. By June 2023 annual inflation will be around 50%,” he said.