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Photo: the Zimbabwe, Gold Coin, LounchingZIMBABWE, AP, KUPANG TIMES - The Zimbabwean government officially launched gold coins for sale to the public, in an effort to suppress the inflation rate which is increasingly threatening the local currency of the country of Zimbabwe.
An unprecedented move, officially announced Monday (25/07/22) by the Reserve Bank of Zimbabwe (RBZ), with the aim, to increase the selling value, transactions and confidence of the people of Zimbabwe, in its own currency.
Public confidence, in the Zimbabwean currency, was very low after people saw their savings wiped out by Hyperinflation in 2008, which reached 5 billion percent, according to the International Monetary Fund (IMF).
With strong memories of disastrous inflation, many Zimbabweans today prefer to scramble in illegal markets.
They are trying to get scarce United States (US) dollars to keep at home as savings or for daily transactions.
Trust in the people, in the Zimbabwean currency is already so low that many retailers don't accept it.
The central bank disbursed 2,000 coins to commercial banks on Monday.
"The first edition of Gold Coins will be produced overseas, while the second edition will be produced domestically,"|John Mangudya (Governor of the Reserve Bank of Zimbabwe)
"Later, the Gold Coins, can be used for purchases in shops, depending on whether the shop has enough change," |John Mangudya (Governor of the Reserve Bank of Zimbabwe)
"The Zimbabwean government is trying to moderate the very high demand for the US dollar, because this high demand is not supported by supply,"|Prosper Chitambara (Zimbabwe economist)
"My hope is that going forward there will be moderation in terms of local currency depreciation, which should have some sort of stabilizing effect in terms of goods prices,"|Prosper Chitambara (Zimbabwe economist)
Any individual or company can buy coins from authorized outlets such as banks, according to an announcement by the country's central bank.
People can buy gold coins from authorized agents such as banks, using local currency or foreign currency.
While the buyer can choose to keep the coins in the bank or take them home. Foreigners can only buy coins in foreign currency, the central bank said.
Called "Mosi-oa-Tunya," which in the local Tonga language refers to Victoria Falls, the coin will have the status of a liquidity asset.
It will be easily convertible into cash and will be traded locally as well as internationally.
“Gold coins can also be used for transactional purposes,” and people holding gold coins can only exchange them for cash after 180 days from the date of purchase,"|Reserve Bank of Zimbabwe (RBZ)
The gold coin, weighing one troy ounce and a purity of 22 carats, can also be used as collateral for loans and credit facilities, the central bank said.
The price of gold coins, determined by the international market price for an ounce of gold, plus 5% for the cost of producing gold coins.
At launch, the price of the Mosi oa Tunya coin was US$ 1,824.
“For the layman, there isn't much immediate benefit from this, especially if you don't have excess cash on hand,”|Reserve Bank of Zimbabwe (RBZ)
Many people do not have the money to buy bread, let alone to save.
"The hope is that it will indirectly benefit ordinary people by moderating prices,”|Prosper Chitambara (Zimbabwe economist)
The fact that the Reserve Bank of Zimbabwe (RBZ) has to buy gold from metal miners such as informal artisanal miners can present challenges and result in increased smuggling.
"Gold shipments in Zimbabwe have recovered significantly due to the appetizing US dollar payments offered to artisanal miners,"|Morgan & Co (a banking securities firm), in a market intelligence report.
Zimbabwe has sizable gold deposits and exports of the precious metal are one of the main foreign currency earners in the southern African country.
Gold production will increase to around 30 tonnes in 2021, compared with 19 tonnes in 2020, according to official figures.
Small-scale producers such as poorly regulated artisanal miners accounted for 19 tonnes of gold shipped in 2021, according to official figures.
"Gold smuggling is rampant, and the country of Zimbabwe is estimated to lose around $100 million worth of gold each month to smuggling,"|Kazembe (Minister of Home Affairs Zimbabwe)
The smuggling costs the country about 36 tonnes of gold a year, according to a report released this month by the Center for Natural Resources Management, the local natural resources watchdog.
By law all gold mined in Zimbabwe should be sold to the Reserve Bank of Zimbabwe (RBZ).
But many producers prefer to smuggle gold overseas for payment in US dollars.
(W.J.B)