The Reserve Bank of Zimbabwe has released 2000 gold coins on the market which will be sold through local banks as authorities attempt to mop up excess Zimbabwe Dollar (ZWL) in the economy and stabilize the exchange rate.
Another batch of gold coins will be released on a demand-basis, the bank said.
The Mosi oa tunya gold coins were pegged at an initial price of US$ 1 823.8 per coin or ZWL$ 805 745.35 using the willing buyer-willing seller rate.
Addressing media this morning, RBZ governor Dr John Mangudya said gold coins were a store of value for citizens and corporates with huge ZWL funds and will curb the parallel market activities driving rates up.
“Gold is an alternative for store of value world over and this is what we have done to help those with huge funds. Gold is a reserve asset,” said Dr Mangudya.
The bank will publish the gold coin price by 0800 hours daily which shall be based on the previous day’s London Bullion Market Association (LBMA) PM Fix plus 5 percent to cover the cost of production and distribution of the gold coins.
The gold coins will have liquid asset status, prescribed asset status, collateral acceptability, tradable and have a Central Bank buy-back when required by the holder of the gold.
The development comes at a time authorities accused suppliers of goods and services to government development programs of driving the exchange rate up whenever the channel bulk payments to the parallel market to purchase foreign currency.
The Governor however warned banks against lending for the purchases of the gold coins.
“The bank would like to remind the investing public that purchases of the gold coins will be done in line with KYC principles as such banks will not allow banks to lend for the purposes of purchasing the gold coins as this will put pressure on the ability of banks to settle their transactions at the Reserve Bank,” said Mangudya.
Analysts say the introduction of the gold notes may partly attain its desired outcome that of managing excess liquidity and stabilizing the exchange rate.
Nevertheless, observers are wary of a general lack of confidence in the instrument and the RBZ which could lead to people continuing to trade on the black market in order to avoid the KYC procedures carried out when buying gold coins at banks.
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