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Tuesday, September 27, 2022
HomeBusinessRBZ To Introduce Gold Coins As Financial Markets Scream

RBZ To Introduce Gold Coins As Financial Markets Scream

The Reserve Bank of Zimbabwe (RBZ) is set to introduce gold coins in the market that will be sold through normal banking channels for the preservation of monetary value amid concerns over the rapid deterioration of both the country’s financial markets and currency.

The decision was made by the RBZ’s Monetary Policy Committee which met last Friday and also agreed on a massive hike of the Bank policy interest rate to 200 percent per annum from 80 percent. The development is likely to slow down the economy from the 5.5 percent earlier GDP growth projection for the year.

Gold is one of the world’s most reliable commodities to hedge against macro-economic instability.

This comes on the back of instability within the country’s financial markets, including the rapid depreciation of the local currency which has left investors in the financial markets run short of hedging alternatives.

“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,” said the RBZ this morning.

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It is not yet clear at what rate will the gold coins be traded as we await further instruction from the Bank.

The Zimbabwe Stock Exchange (ZSE) has endured a bloodbath in recent months. During the period May to June 14, 2020 the All Share Index lost 9.58 percent of its value closing at 24 136.42 points.

Last Friday, the bourse extended its losses with the All Share Index retreating 1.83 percent to close at 21 073.30 as investors continue to trade cautiously in the wake of negative market sentiment brought about by policy missteps by authorities.

The introduction of the gold coin will be welcome development for the country as it widens investment instruments.

Many developed countries have gold coins including Britain which has the Sovereign Gold Coins, Canada with the Maple Gold Coins, USA with the Eagle Gold Coins and South Africa which has the Krugerrand Gold Coins which tend to be more stable and dependable investment instruments in times of economic distress.

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