Zimbabwean central bank introduces gold coins as store of value

In a statement following a meeting of the bank's Monetary Policy Committee (MPC) on June 24, RBZ governor John Mangudya also announced some measures meant to curb inflation.

"The 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," Mangudya said.

He said that the MPC had expressed great concern over the recent rise in inflation, which increased to 30.7 percent on a month-on-month basis for June 2022, thereby increasing the year-on-year inflation for June to 191.6 percent.

"The committee noted that the increase in inflation was undermining consumer demand and confidence and that, if not controlled, it would reverse the significant economic gains achieved over the past two years," he said.

In that regard, the MPC resolved to put in place measures to align the interest rates with the inflation developments and enhance the circulation of foreign exchange, on top of the introduction of gold coins.

Interest rates and statutory reserves for financial institutions were reviewed with effect from July 1, with the MPC increasing the bank policy rate from 80 percent to 200 percent per annum.It also increased the Medium Term Accommodation interest rate from 50 percent to 100 per cent, while the minimum deposit rate was increased for Zimbabwean dollar savings from 12.5 percent to 40 percent per annum.

The minimum rate for Zimbabwean dollar time deposits was also increased from 25 percent to 80 percent per annum.

The MPC, however, maintained the Statutory Reserve Requirements at the current levels of 10 percent for demand and call deposits and 2.5 percent for savings and time deposits.

"In order to enhance the circulation of foreign currency in the economy, as well as to support the willing-buyer willing-seller foreign exchange market, the MPC resolved to maintain the current export retention thresholds across the various sectors of the economy and that 25 percent of the unutilized 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," Mangudya added.

The MPC had also noted the widespread use of forwarding pricing in foreign exchange by some economic agents and had therefore resolved that mechanisms to formalize forward pricing arrangements should be created.

This would be done through the development of a market for forwarding exchange rates, he said. (ANI/Xinhua)