The Reserve Bank of Zimbabwe (RBZ) is set to introduce gold coins to the market which will be sold through normal banking channels for the preservation of monetary value amid concerns over rapidly deteriorating currencies. financial and currency markets of the country.
The decision was taken by the RBZ’s Monetary Policy Committee which met last Friday and also agreed to a massive hike in the Bank’s key interest rate to 200% per annum from 80%. The development is expected to slow the economy from the GDP growth forecast of 5.5% for the year.
Gold is one of the world’s most reliable commodities for hedging against macro-economic instability.
This is explained by the instability of the country’s financial markets, in particular the rapid depreciation of the local currency which has left investors in the financial markets short of hedging alternatives.
“The MPC has decided to introduce gold coins into the market as an instrument for 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,” the RBZ said this morning.
It is not yet clear at what rate the gold coins will be exchanged as we await further instructions from the Bank.
The Zimbabwe Stock Exchange (ZSE) has suffered a bloodbath in recent months. During the period from May to June 14, 2020, the All Share Index lost 9.58% of its value, closing at 24,136.42 points.
The stock market extended its losses last Friday, with the All Share Index falling 1.83% to close at 21,073.30 as investors continue to trade cautiously following negative market sentiment caused by the errors. government policies.
The introduction of the gold coin will be a welcome development for the country as it expands investment instruments.
Many developed countries have gold coins, including Great Britain which has the sovereign gold coins, Canada with the maple gold coins, the United States with the Eagle gold coins and South Africa which has the Krugerrand gold coins which tend to be more stable and reliable instruments of investment in times of economic distress.