RBZ sells 6,700 gold coins to date, 95% in Zim dollar

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By Alois Vinga

HARARE: A total 6,799 gold coins have been sold to date with the bulk of sales made in local currency, the Reserve Bank of Zimbabwe (RBZ) Monetary Policy Committee reported Tuesday.

The gold coins were conceived as a measure to provide the market with an alternative investment option. This was done to curtail practices of chasing after scarce foreign currency, which in the past left a trail of exchange rate instability and inflation hikes.

Market watchers have acknowledged the introduction of gold coins had eased both inflation and exchange rate depreciation pressures.

In a statement following the recent convening of the MPC, central bank governor, John Mangudya said the impact of recent monetary measures were noted with satisfaction amid an upsurge in the performance of the gold coins.

He said effective monitoring and enforcement of market discipline by the Financial Intelligence Unit (FIU) and the review and enhancement by the government of its procurement processes and practices to ensure value for money had resulted in the stability of the exchange rate and a decline in inflationary pressures.

“As at 26 August 2022, a cumulative total of 10 000 gold coins had been minted, and out of which 8 076 gold coins had been distributed to the Bank’s agents for sale. A total of 6 799 gold coins had been sold as at 26 August 2022, with 75% having been bought by corporates and 25% by individuals,” Mandudya said.

“Ninety five per cent (95%) of the gold coins sold were purchased in local currency and the balance in foreign currency.”

The MPC also noted the decline in month-on-month (MoM) inflation from 25.6% in July 2022 to 12,4% in August 2022 and as previously advised, it was expected that MoM inflation would progressively decline, while annual inflation was expected to continue rising to reach an annual peak in September 2022 due to the lower base effect in 2021.

“On the back of the tight monetary policy stance pursued by the Bank, the official and parallel market foreign exchange rates were expected to converge in the outlook period, thereby fostering price stability and anchoring inflation and exchange rate expectations,” he said.

Mandudya said in order to ensure sustained exchange rate and inflation stability in the economy, the MPC resolved to maintain the tight monetary policy stance, while ensuring adequate support to the productive sectors of the economy.

“In particular primary agriculture, agro-processing and small and medium enterprises (SMEs) as follows: maintaining the bank policy rate at 200% per annum; and maintaining the Medium Term Accommodation interest rate at 100% per annum,” he added.