(Bloomberg) — Zimbabwe’s central bank plans to sell gold coins to the public from July 25 as a store of value to stabilize the nation’s tumbling currency and offer an alternative to the US dollar.
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The one-troy-ounce gold coins will be called Mosi oa-Tunya Gold Coin, Governor John Mangudya said. The term means “Smoke that Thunders,” a reference to Victoria Falls, the world’s greatest sheet of falling water, which traverses Zimbabwe and Zambia.
The gold coins will “be available for sale to the public in both local currency and US dollars and other foreign currencies at a price based on the prevailing international price of gold and the cost of production,” he said in an emailed statement.
The 22-carat coin will be identified by a serial number and can be easily converted to cash, trade-able locally and internationally and used to transact. It can also be used as security for loans and credit facilities, Mangudya said.
The coin forms part of measures to deal with a currency crisis that’s seen the annual inflation rate jump to 192% in June and a sharp depreciation in the Zimbabwean dollar, which has lost more than two-thirds of its value against the dollar this year.
IH Securities, a Harare-based brokerage, expects the sale of the coins to boost investor confidence in the Zimbabwean dollar, which will be used to buy them. “This would distinguish the gold coin market from the government paper market or money market,’ it said in an emailed note to clients.
It also sees the central bank being able to “mop up considerable levels” of excess Zimbabwean dollar liquidity through the sale of the coins.
(Updates from penultimate paragraph with brokerage firm’s comment)
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