The World Briefly

July 27, 2022

Gold Rush

Zimbabwe

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Zimbabwe launched gold coins to be sold to the public this week, a move economists say is aimed at curbing soaring inflation that has eroded the value of the African country’s unstable currency, Al Jazeera reported Tuesday.

The Reserve Bank of Zimbabwe said the newly-minted Mosi-oa-Tunya – the local name for Victoria Falls – will have “liquid asset status” and can easily be converted to cash and can be used locally and internationally.

The central bank added that the coins can be used to make purchases in shops and as collateral for loans.

So far, it has distributed 2,000 coins to commercial banks. The first batch of the 22-carat coins was minted outside Zimbabwe but officials said they plan to produce them locally.

Their price will be decided by the rate of an ounce of gold on the international market plus five percent for coin production expenses. One Mosi-oa-Tunya was priced at $1,824 at the time of its introduction Monday.

Currently, trust in Zimbabwe’s currency is low after many saw their savings wiped out following the 2008 hyperinflation period. In June, inflation rose to nearly 192 percent from 132 percent a month earlier.

Zimbabwe is experiencing an economic crisis marked by a sharp decline in industrial production, a quickly depreciating local currency and 90 percent unemployment. The African nation has considerable gold reserves and exporting the precious metal is one of Zimbabwe’s main foreign currency earners.

Even so, gold smuggling remains a serious problem in the country, costing the state about 33 tons of gold annually.

Analyst Victor Bhoroma told Al Jazeera that the gold coins are a good idea “in terms of storing value,” but cautioned that the strategy could be “a fundraising scheme to get US dollars from the market by the central bank.”

This story originally appeared in the July 27, 2022 newsletter, Huffing and Puffing.