Oliver Kazunga Senior Business Reporter
A TOTAL of 14 000 Mosi-a-Tunya gold coins valued at $13,6 billion have been sold since July this year with corporates having bought the bulk of the bullion coins to hedge against inflation and create more value.
The Reserve Bank of Zimbabwe (RBZ) introduced the gold coins last July as a store of value starting with higher denominations before the smaller units of the gold coins were introduced to the general public mid-last month.
The coins have complemented similar measures by fiscal authorities who in July reviewed Government supply contracts priced using the parallel market exchange rates that contributed to the creation of excess liquidity that drove exchange rate volatility on the black market.
The exchange rate and inflationary pressures have largely been stable since the introduction of gold coins to provide an alternative investment option to the US dollar and mop up excess liquidity from the local market.
RBZ Governor Dr John Mangudya who was represented by his deputy Dr Innocent Matshe, said this on Monday at the 2023 post-national budget breakfast meeting organised by the Confederation of Zimbabwe Retailers (CZR).
“A total of 14 000 gold coins have been sold as at November 22, 2022 and 90 percent of the gold coins were bought by corporates while a balance of 10 percent by individuals.
“The gold coins have mopped a cumulative total of $13,6 billion worth excess liquidity since their launch in July 2022.”
He said the monetary authorities were continuing with a tight monetary stance that was being buttressed by the favourable uptake of gold coins as an alternative stable financial product for store of value.
“The bank began issuance of smaller denomination gold coins from November 15, 2022 to increase convenience and access by the general public as the coins provide a formal means of saving and reduce illegal trade in foreign currency and this stabilises the exchange rate,” said Dr Mangudya.
At inception, RBZ supplied the market with one-ounce coins that entered the market at US$1 884,80 or $936 589,89 each, resulting in fewer ordinary people buying them because of the high price.
The smaller denominations of the gold coins have similar features and characteristics of the one-ounce gold coins, save for the aspects such as one-tenth ounce with a diameter of 16mm, weight of 3,39g, edge type (fully reeded with serial number on face of the coin), and thickness of 1,2mm.
A quarter of an ounce gold coin has a diameter of 21mm with a weight of 8,48g, edge type (reeded with serial number and engraved), and a thickness of 1,65mm.
Half an ounce gold coin has a diameter of 25mm, weighing 16,97g, edge type (reeded with serial number engraved) and a thickness of 2,25mm.
Dr Mangudya said guided by an inflation target of below three percent month-on-month, RBZ is putting in place interventions not only to consolidate the prevailing macro-economic stability but also to ensure the monetary policy is well coordinated and complements the fiscal policy.
“The policy measures being pursued by the Government are already bearing fruit. The central bank is aligned not only with the objectives of the budget that we are talking about . . . , but also with NDS 1 (National Development Strategy 1) and Vision 2030.
“We will continue with the implementation of a tight monetary policy to ensure price, exchange rate and financial stability that are necessary for macro-economic growth and development,” he said.
Zimbabwe’s monthly inflation fell to 1,8 percent last month, its lowest since April last year and the second lowest for more than three years.
In an interview after the breakfast meeting, economist Victor Bhoroma said the market was gratified that inflation was on a downward trend.
“We are quite happy that month-on-month inflation is actually coming down and that the central bank and the Government obviously took decisive action in terms of addressing inflationary pressure.
“The highest levels of inflation have been challenging for the local business sector,” Mr Boroma said.