Zimbabwe sells 1,500 gold coins in its fight against inflation, plans to release 2,000 more
(Kitco News) Zimbabwe saw strong demand for its gold coins released to tame inflation by providing a store of value to the country's plunging currency and giving the population an alternative to the U.S. dollar.
The country's central bank sold 1,500 gold coins after launching the program on July 25, Bloomberg quoted Governor John Mangudya as saying on Monday.
And now, Zimbabwe is planning to make 2,000 more gold coins available to the public.
The central bank is selling one troy ounce 22-carat gold coins called 'Mosi-Oa-Tunya.' The name means "Smoke that Thunders," referencing Victoria falls.
Each gold coin has a serial number and can be purchased with local currency, the U.S. dollar, and other foreign currencies.
The price is set based on the international price of gold and production costs. As of Monday, each gold coin was going for $1,841, according to the central bank's website.
The owners of the gold coins can convert them into cash or trade them whenever needed. The gold coins could also be used for transactional purposes and as a security for loans.
The goal of the gold coins is to lower the demand for U.S. dollars following the collapse of the Zimbabwe dollar. Surging inflation and currency devaluation have made things difficult for Zimbabwe's population. The country's annual inflation was nearly 192% in June.
In response to the crisis, Zimbabwe's central bank was forced to more than double its policy rate from 80% to 200%, a new record.
"The committee noted that the increase in inflation was undermining consumer demand and confidence and that, if not controlled, it would reverse the significant economic gains achieved over the past two years," central bank Governor John Mangudya said last week.
At the time, Zimbabwe also revealed plans to adopt the U.S. dollar as legal tender for the next five years to stabilize the country's exchange rate. This is the second time in more than a decade that Zimbabwe is legalizing the greenback as legal tender.
"Government has clearly stated its intention of maintaining a multi-currency system based on dual use of the U.S. dollar and the Zimbabwe dollar," Finance Minister Mthuli Ncube said last week.