The ManicaPost
Samuel Kadungure
Senior Reporter
THE introduction of gold coins has been well received by industry, commerce and the investment community as the move is expected to hedge against inflation and depreciation of the local currency.
On Monday, the Reserve Bank of Zimbabwe (RBZ) disbursed 2 000 gold coins to commercial banks to boost confidence in the local currency.
Internationally, gold coins are used in countries such as China, South Africa and Australia to hedge against inflation and as an investment opportunity.
RBZ Governor, Dr John Mangudya said the gold coins can be used for purchases in shops, subject to availability of change.
The intervention is expected to moderate the high demand for the United States dollars, which is not being matched by supply, thereby resulting in the stabilisation of prices of goods and services.
“The coins will have liquid asset status, that is, it will be capable of being easily converted to cash, and will be tradable locally and internationally. The coin may also be used for transactional purposes,” said Dr Mangudya.
The coins can only be traded for cash after 180 days and each weighs one troy ounce with a purity of 22 carats.
They can also be used as security for loans and credit facilities.
Businessman and economist, Mr Gilbert Muponda on Wednesday said the intervention by the RBZ has given industry an investment opportunity which effectively hedges against inflation.
“The gold coins allow industry and commerce to diversify their investment holdings while protecting value. The initiative will go a long way in stabilising the local currency as it gives confidence to the market.
“The gold coins are available in local currency, which means investors will be looking for local currency to buy the gold coins. This demand for local currency will help stabilise the local currency,” he said.
Mr Muponda said in addition to the gold coins, the RBZ should come up with more measures to accumulate more gold reserves such that the local currency has enough gold backing.
“Industry and commerce also needs to be supported to increase production and exports. Value addition to local minerals and agricultural produce is critical to boost our exports, which will improve the country’s balance of payment position,” said Mr Muponda.
Reapers (Pvt) Limited chief executive officer, Mr Basil Nyabadza said the gold coins will be effective in stabilising the local currency.
He went on to urge Government to address anomalies in industry and the banking sector.
“The introduction of gold into our financial sector for the benefit of the economy will work very well. However, there are anomalies that currently exist and this is contributing to the current scenario where trust in our currency has been lost over the years,” said Mr Nyabadza.
Mr Nyabadza said the answer to a stable economic environment also lies with companies listed on the Zimbabwe Stock of Exchange (ZSE).
“Key players in the Zimbabwean economy are Government and the private sector, represented by companies listed on the Zimbabwe Stock Exchange.
“Principals must meet and find common ground. The majority shareholders in each counter listed on ZSE must meet Government as one group. This means the real and actual majority shareholders, not representatives or management as has been the norm. The meeting will bring positive results to our economy as both parties have much to gain or lose.
“The gold coins will work as result of the goodwill from both parties. The Zimbabwean economy will take a completely different direction from where it is today,” said Mr Nyabadza.
Secretary General of the Zimbabwe Federation of Trade Unions (ZFTU), Mr Kennias Shamuyarira said there is need for small denominated gold coins to benefit labour.
“The coming in of gold coins is meant to ensure a store of value and labour should be taken on board. So far, very few can afford these gold coins. The RBZ should therefore consider small denominated gold coins as the nation work on a formidable formula to put all economic fundamentals in place,” he said.
