Zimbabwe will soon launch a gold-backed digital currency to offset the ongoing depreciation of the local currency against the dollar, the country’s state newspaper Sunday Mail reported, citing Central Bank Governor John Mangudya.
According to the news, those holding small amounts of Zimbabwean dollars will be able to store value and protect against currency fluctuations by exchanging their coins with digital tokens.
Mangudya told the Sunday Mail that the tokens in question will help those with low amounts of money to be able to buy gold, “so we don’t leave anyone and nowhere behind.”
Gold Coins Have Been Issued in Zimbabwe in the Past Period
South Africa Zimbabwe also launched gold coins last year to clean up excess liquidity and stabilize its local currency. Officially, the local currency is traded at 1,000.4 Zimbabwean dollars against the dollar, but it changes hands on the streets of the capital at 1,750 Zimbabwean dollars.
Mangudya said the current exchange rate volatility is due to the expectation that the market’s foreign exchange supply will increase when the tobacco auction season begins in March.
Since the start of the auction season, Zimbabwe has exported 54.9 million kilograms of tobacco worth $307 million. In the same period of last year, 57 million kilograms of tobacco worth $295.5 million were shipped.
Zimbabwe abandoned its own currency in 2009 and began using predominantly the US dollar instead, after a period of hyperinflation rendered the local currency worthless. The Zimbabwean dollar was reintroduced in 2019 to stimulate the stagnating economy, but the government decided in June to reintroduce the dollar into a legal tender to contain the excessive price increases.
*Not investment advice.
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