The Reserve Bank of Zimbabwe (RBZ) has suspended the sale of gold coins, sparking warnings from economic analysts about potential inflationary pressures and financial market instability. RBZ Governor Dr. John Mushayavanhu clarified that the suspension is a mop-up exercise to clear remaining stock, including previously redeemed coins.
A senior economist cautioned that the suspension could have unintended consequences, such as pushing holders of excess Zimbabwe Gold (ZWG) currency into the parallel forex market, weakening the local currency. The economist warned that without alternative measures, the RBZ might struggle to maintain exchange rate stability.
The gold coins were designed to absorb excess liquidity and stabilize the local currency. Without them, the RBZ has fewer tools to control speculative behavior in the foreign currency market, potentially leading to inflationary risks if money supply outpaces productive activity.
As of February 2023, the RBZ had sold gold coins worth ZW$20 billion, with pension funds investing ZW$2.29 billion. The suspension could lead to renewed volatility in the currency market if alternative instruments are not introduced.
The RBZ insists that gold coins already in the market remain valid for trade or redemption. However, analysts say the suspension could test the resilience of Zimbabwe’s newly introduced structured currency, particularly if demand for foreign exchange surges.
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