RBZ to introduce gold coins, hikes interest rates

RESERVE Bank of Zimbabwe (RBZ) says it will be introducing gold coins as part of measures to ensure investors and the general public have alternative means to preserve value, cushioning them from the negative impact of resurgent inflation in the economy.

According to RBZ the "gold coins" that will be minted at the Fidelity Gold Refineries, "will be available through normal banking channels.

Gold is considered a safe haven against inflation and a gold coin is made mostly or entirely of gold, while most gold bullion coins are pure gold.

Studies show that gold has outperformed the inflation rate and reduced the risk by a considerable margin.

Most gold coins minted are 90–92 percent gold (22 karat).

Popular bullion coins include the American eagle, the Canadian Maple Leaf, the South African Krugerrand, the Isle of Man Gold Cat, the Australian Kangaroo, and the China Mint Panda Bear.

The proposition has the potential to have a stabilisation effect on the economy if conducted properly given the stability and value storage associated with gold.

Zimbabwe's inflation increased to 191,6 percent and 30,7 percent on a year-on-year and month-on-month basis for June 2022 respectively which is far astride from government projections of achieving 30 percent inflation rate by end of year.

In a statement this morning, RBZ Governor Dr John Mangudya said the Monetary Policy Committee (MPC) had noted the increase in inflation with concern as it was stifling consumer demand and confidence, an undesirable position that has the potential to derail economic strides attained in the economy over the past two years.

"The Monetary Policy Committee (MPC) resolved to introduce gold coins into the market as an instrument that will enable investors to store value.

"The gold coins will be minted by Fidelity Gold Refineries (Private) Limited and will be sold to the public through normal banking channels," said Dr Mangudya.

Other interventions planned by the apex bank include increasing the bank policy rate from the current 80 percent to 200 percent per annum as a way of reducing the money supply in the economy, while the Medium Term Accommodation interest rate increased from 50 percent to 100 percent per annum.

The central bank policy rate (CBPR) is the rate that is used by the central bank to implement or signal its monetary policy stance and provides an indicator of the minimum level of lending rates for banks.

The central bank has also increased the minimum deposit rate for local currency savings to 40 percent per annum from 12, 5 percent.

Time deposits minimum rate for Zimbabwe dollars was increased to 80 percent per annum from the current 25 percent.

To improve the flow of foreign currency in the economy along with fine-tuning the foreign exchange market willing-buyer willing-seller arrangement, he said the export retention thresholds would remain the same.

"The MPC resolved to maintain the current export retention thresholds across the various sectors of the economy and that 25 percent of the unutilised export receipts shall be liquidated at the willing-buyer willing-seller exchange rate after 120 days from the date of receipt of the export proceeds," he said.