Zimbabwe to introduce gold-backed digital currency

Zimbabwe will soon introduce a gold-backed digital currency meant to stabilise the local unit from its continued depreciation against the dollar, state-run Sunday Mail reported, citing central bank governor John Mangudya.

This will allow those holding small amounts of Zimbabwe dollars to exchange their money for digital tokens to store value and hedge against currency volatility, the report said.

The tokens will help ensure that those with low amounts of currency can buy the gold units “so that we leave no one and no place behind”, Mangudya told the Sunday Mail.

Last year, the Southern African country also introduced gold coins in bid to mop up excess liquidity and stabilise the local unit. Officially, the local currency trades at Z$1 000.40 against the dollar but readily changes hands at Z$1 750 on the streets of the capital.

Mangudya said current exchange rate volatility was due to expectations of increased foreign currency supply in the market when the tobacco auction season started in March, the Sunday Mail reported.

To date, since the start of the auction season, Zimbabwe has exported 54.9 million kg of tobacco valued at US$307-million. During the same period last year, it had shipped 57 million kilograms valued at $295.5-million.

Legal tender

Zimbabwe abandoned its currency in 2009, replacing it mainly with the US dollar after an episode of hyperinflation rendered the local money worthless. The Zimbabwe dollar was reintroduced in 2019 in a bid to revive the stagnating economy, but the government in June decided to make the greenback legal tender again to try and tame rampant price increases.  — Godfrey Marawanyika, (c) 2023 Bloomberg LP

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