RBZ to inject 2 000 more gold coins

Nqobile Bhebhe,Senior Business Reporter
THE Reserve Bank of Zimbabwe (RBZ) is set to inject an additional 2 000 batch of Mosi-oa-Tunya gold coins into the market this week after the initial sale last week attracted huge market appetite.

About 85 percent of the initial 2 000 gold coins were sold in local currency, said the apex bank in a public notice yesterday.

The opening price of US$1 823 or $805 745 per coin excited the market with banks indicating that they were overwhelmed by demand by their corporate and individual customers seeking a legal and sensible way of preserving value.

Yesterday, the gold coins were selling at US$1 841 or $863 101 after closing at US$1 841 or $858 428 on Friday.

RBZ governor, Dr John Mangudya, said during last week’s Friday monetary policy committee (MPC) meeting, it was resolved to add a further 2 000 gold coins in the market.

“A total of 1 500 gold coins were sold by the bank’s agents during the first week of their release into the market, with 85 percent having been bought in local currency and the balance of 15 percent in foreign currency,” he said.

“An additional 2 000 gold coins will be released into the market during the week commencing 1 August 2022.”

Dr Mangudya said gold coins would buttress the tight monetary policy stance, which among other issues includes maintaining interest rates at current levels of 200 percent.

With month-on-month inflation having declined from 30,7 percent in June to 25,6 percent in July, he said the MPC noted that the progressive decline will continue in the outlook period as a result of the tight monetary policy stance being pursued by the bank.

“The MPC also noted that the disinflation trend will be reinforced by measures Government was taking to deal with factors that destabilise the foreign exchange market, particularly by reviewing the basis and framework for payments to its suppliers of goods and services in its quest to stabilise the foreign exchange market and enhance value for money,” said Dr Mangudya.

“The MPC further noted that while monthly inflation is expected to continue to decelerate during the outlook period, annual inflation will continue to increase up to September 2022 as a result of the lower base effect in 2021.”

According to the central bank’s daily updates, the value of the gold coins, which are sold using both the local and foreign currency at the prevailing international gold price, has been changing on a daily basis.

Outlining guidelines for buying the newly- introduced gold coins, the central bank said the gold price would be published daily in the morning and based on the previous day’s London Bullion Market Association (LBMA) PM Fix plus the cost of producing the coin.

The reserve bank introduced the coins to help cushion corporates and individuals from the negative impact of declining cash values and mop up large sums of Zimbabwe dollars sloshing around in some bank accounts of corporates and wealthy individuals.

Local banks are temporarily not allowed to buy the gold coins for their own portfolios until the RBZ decides otherwise in line with developments in the economy.

Banks can only receive the coins from the Reserve Bank for onward selling to their customers on behalf of the apex bank.

On the opening day last week, the coin was selling at 30 753 in South African rand, Botswana pula (P23 115), British pound (£1 523), Australian dollar (AUD2 640), euro (€1 788) and $805 745 in local currency.

On Tuesday, the coin had slightly dropped in all foreign currencies going for 30 206 in South Africa rand, Botswana pula (P22 904), Australian dollar (AUD2 592), British pound (£1 495) and euro (€1 765).

On the third day, the price rose for the currencies with South Africa rand selling for 30 508, Botswana pula (P22 977), Australian dollar (AUD2 603) British pound (£1 498), Euro (€1 780) and $817 481.

On Friday, in South Africa rand, the gold coin cost 30 343 rand and Botswana Pula (P23 247), Australian dollar (AUD2 627), British pound (£1 802) British Pound (€1 510) and $858 428 in local currency.

Presenting the 2022 Mid-term fiscal policy statement in Parliament on Thursday last week, Finance and Economic Development Minister Professor Mthuli Ncube said Government introduced the gold coins as an instrument that enables investors to store value in both local and foreign currency, through the gold coins minted by Fidelity Printers and Refiners.

The central bank will introduce lower denomination gold coins within a month to cater for low-income buyers who may not afford the current rates.