Declaring its July launch of one-ounce gold coins a success, Zimbabwe's central bank says it will begin issuing and selling coins in smaller gold denominations this fall. “Following the successful launch of the gold coins on 25 July 2022 and in response to public demand, the bank shall introduce and release into the market gold coins in units of a tenth ounce, quarter ounce and half an ounce for sale with effect from mid-November 2022,” Reserve Bank of Zimbabwe governor John Mangudya said this week.
Zimbabwe Finds a New Way to Combat Inflation
Zimbabwe is no stranger to inflation. In 2009, Zimbabwe's inflation rate hit an all-time high, prompting the central bank to issue astronomical denominations. The Z$50 billion bill was only enough to buy two loaves of bread. This record-breaking hyperinflation caused widespread economic hardship, and led to the abandonment of the Zimbabwean dollar in favor of the US dollar. While the country's current inflation rate is still high, it seems almost tame compared to those earlier days.
The coins, which can be purchased from approved banks, were introduced to combat rampant inflation driven by locals exchanging Zimbabwean dollars for US dollars. In July, Zimbabwe's inflation rate was over 250%. One ounce gold coins are currently valued around $1,800, which is well out of the price range for most citizens. In fact, the average civil servant in the country only earns $2,600 a year, according to the BBC. To make the coins more accessible, they will be issuing lower denomination coins.
When the coins were released, Mangudya said:
“We are now providing that store of value to ensure that people do not run to the parallel market in search for foreign currency to store value. And there is no other better product that can be used to store value other than gold. We know what you have been going through in terms of the fear factor of losing value and therefore, we are providing this gold coin."