HARARE, ZIMBABWE (AP) – Zimbabwe has launched gold coins to be sold to the public in a bid to tame runaway inflation that has further eroded the country’s unstable currency.
The unprecedented move was announced Monday by the country’s central bank, the Reserve Bank of Zimbabwe, to boost confidence in the local currency.
Trust in Zimbabwe’s currency is low after people saw their savings wiped out by hyperinflation in 2008 which reached five billion per cent, according to the IMF.
With strong memories of that disastrous inflation, many Zimbabweans today prefer to scramble on the illegal market for scarce US dollars to keep at home as savings or for daily transactions. Faith in Zimbabwe’s currency is already so low that many retailers don’t accept it.
The central bank disbursed 2,000 coins to commercial banks on Monday. The first batch of the coins was minted outside the country but eventually they will be produced locally, according to the governor of the Reserve Bank of Zimbabwe John Mangudya.
The coins can be used for purchases in shops, depending on whether the shop has enough change, he said.
“The government is trying to moderate the very high demand for the US dollar because this high demand is not being matched by supply,” said Zimbabwean economist Prosper Chitambara.
“The expectation is that … there will also be moderation in terms of the depreciation of the local currency, which should have some kind of stabilising effect in terms of pricing of goods,” he said.
Any individual or company can buy the coins from authorised outlets such as banks and can keep the coins at a bank or take them home, according to an announcement by the country’s central bank. Foreigners can only buy the coins in foreign currency, said the central bank.
Called Mosi-oa-Tunya, which in the local Tonga language refers to Victoria Falls, the coins “will have liquid asset status, that is, it will be capable of being easily converted to cash, and will be tradable locally and internationally. The coin may also be used for transactional purposes”, said the central bank. People holding the coins can only trade them for cash after 180 days from the date of buying, the bank said.