“Gold coins mopped up $10 billion” -Newsday Zimbabwe

Gold coin

The GOVERNMENT claims that gold coins introduced in July this year have absorbed nearly $10 billion from the parallel market.

It comes as President Emmerson Mnangagwa has claimed that Zimbabweans have an appetite for gold coins which is why the government will introduce smaller coins next month.

“The Reserve Bank of Zimbabwe (RBZ) sold over 10,000 gold coins for around $15 million. This means that Zimbabweans have an appetite for gold coins and for saving. Our goal is to release 30 million US dollars worth of coins.

“By mid-November this year, the RBZ should be able to unveil smaller denominations of gold coins, ranging in value from one-tenth, one-quarter to one-half ounce,” Mnangagwa said in his weekly column in the state. media.

Analysts, however, say that the introduction of smaller gold coins will not help the country’s economy grow as the government needs to further support the struggling productive sector to achieve economic growth.

Analyst Effie Ncube said that while gold coins could temporarily slow inflation and reduce pressure on the exchange rate, they would not solve the economic crisis in the country.

“Introducing smaller denominations of gold coins is not going to solve the economic crisis in the country. More comprehensive and comprehensive measures are needed to turn around the troubled economy,” Ncube said.

Finance ministry spokesman Clive Mpambela said gold coins were effective in stabilizing the foreign exchange market.

“The gold coins were effective in the sense that they took about $9.7 billion out of the market, which probably would have ended up driving the foreign currency out. The smaller coins will be half an ounce or a quarter of an ounce,” Mphambala said.

“The impact of removing $10 billion is equivalent to removing nearly $100 billion of purchasing power that would otherwise be in search of currency. That $10 billion is equivalent to between 70 and 100 billions of dollars on a velocity basis.Indeed, gold coins have helped a lot in stabilizing the exchange rate.

“If you think about the circulation of $10 billion in the economy, it has a multiplier effect. The gold coins therefore immunized or sterilized this money. So this has stabilized the exchange rate in addition to other government initiatives including the value for money initiative,” he added.

Economist Persistence Gwanyanya said that in the face of increased instability, gold coins were a viable alternative to restore the value of the local currency.

“The timing of the issuance of these smaller denominations is important as it coincides with increased local currency liquidity through bonus payouts. This will address the concern that the product was designed for the elite” , said Gwanyanya.

Another economist, Busisa Moyo, said: “Zimbabwe is an underrated leader in this transformational change. Gold provides an alternative store of value to reserve currencies such as the US dollar, which have been volatile of late.

Mnangagwa’s government took an unprecedented step by introducing gold coins as legal tender after inflation rose from 191% in June to 257% in July this year.

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