Zimbabwe today minted 2,000 gold coins on its local market, a measure announced at the end of June to offer the population and investors a “reserve of value” against rising inflation and the devaluation of the local dollar, but which has also received critics.
“Gold is an alternative store of value around the world and this is what we have done to help those with deep (Zimbabwean dollar) funds,” Gov. of the Central Bank of the country, John Mangudya.
Zimbabwe, where annual inflation is now over 190%, has a multi-currency system, with US dollars and Zimbabwean dollars in circulation, but most citizens are paid in local units, the value of which has been steadily falling.
For this reason, many Zimbabweans or businesses change their income into US dollars but, due to the scarcity of foreign currency in the formal banking sector, many obtain it on the black market, where the exchange rate is about double the current official rate. of 423 local units.
The new coin weighs just over 31 grams, is made of 22-carat gold and is engraved with the country’s coat of arms and an image of the famous Victoria Falls, with whose indigenous name (Mosi-oa-Tunya) it has been baptized.
The official sale price per unit this Monday was 1,823 US dollars and more than 805,000 Zimbabwean dollars.
The local financial services company Inter-Horizon Group (IHG, in English) was one of the voices critical of the measure, suggesting in a report that the new currency could have the opposite effect: facilitating speculation and, therefore, aggravating the devaluation of the local unit.
According to IHG analysis, in a hypothetical case, for example, a person could purchase on the black market with just US$1,700 the necessary amount of Zimbabwean dollars to buy two gold coins, and then sell them at the official price in foreign currency. abroad, obtaining benefits of 100%.
For his part, the government spokesman, Nick Mangwana, admitted on Monday that the measure will not be the definitive solution to the financial problems that the country is suffering.
“Mosi-oa-Tunya is a savings option for those who want to store value. It is not a magic formula for other individual financial challenges related to cash,” the spokesperson said via Twitter.
Officials have recently threatened to call a strike if the state does not agree to pay them a monthly salary of more than US$800, but the government says it cannot afford to pay salaries in hard currency.
The economic situation in the country is increasingly seen as a repetition of the last inflation crisis unleashed in 2006, which the World Bank estimated at 231,000,000% in November 2008, when it reached its highest point.
In the midst of the 2006-2008 crisis, the government issued a 100 billion Zimbabwean dollar note that was not even enough to buy a loaf of bread.
The move had limited impact and Zimbabwe ended up adopting the US dollar as its local currency from 2009 to 2016.
The Zimbabwean dollar was reintroduced in 2016, initially with two and five dollar bills.