Reserve Bank of Zimbabwe to introduce gold coins as store of value; USD made legal tender

On Monday June 27, The Reserve Bank of Zimbabwe (RBZ) announced the introduction of gold coins into the market as a store of value.

After the meeting of the Monetary Policy Committee (MPC) of the bank concluded, the Reserve Bank of Zimbabwe's Governor John Mangudya announced a few measures to curb inflation, in a statement.

"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 further said that the latest spike in inflation, which rose to 30.7% on a month-over-month basis for June 2022, bringing the year-over-year inflation to 191.6%, had caused the MPC to express grave concern.

"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.

Key lending rates increased to 200%

Mangudya stated that since the year-on-year inflation rate shot up to 191.6%, interest rates and statutory reserves were reviewed and the bank policy rate was increased from 80% to 200%.

He also stated that an aggressive monetary stance was needed to stop the rise in prices and enhance the circulation of foreign exchanges. The new interest rates will come into effect from July 1, 2022.

The Medium term Accommodation interest rate was doubled to 100% from 50%, while for Zimbabwean dollar savings, the minimum deposit rate was increased to 40% from 12.5% per annum.

Mangudya further added, "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 per cent of the unutilised exports receipts shall be liquidated at the willing-buyer willing-seller exchange rate after 120 days from the date of receipt of exports proceeds."

According to reports, Finance Minister of Zimbabwe Mthuli Ncube, on June 27, announced that to help stablise the Zimbabwaen currency, the government will legalise the use of US Dollar for next five years.

(With inputs from ANI)