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Zimbabwe is expected to launch a new currency at its monetary policy meeting on Friday, which will be backed by its gold reserves, as part of its government’s efforts to mitigate the effects of the local currency’s collapse.
After a tour of the central bank’s vaults, President Emmerson Mnangagwa said the Reserve Bank of Zimbabwe had enough gold to back the new currency.
The central bank’s new governor John Mushayavanhu reportedly said it has the equivalent of 2.5 tons of gold reserves, or 1.1 ton of gold, minerals that would equal 0.4 ton of gold if converted, and 1 ton of gold held offshore.
“Zimbabwe has less than a month of reserves, not enough to defend the structured currency,” economist Tinashe Murapata told Financial Times. “A new currency every five years now seems the norm.”
The current Zimbabwe dollar’s value has plummeted more than 70% this year. To note, the country has a multi-currency system in place till 2030.
Many Zimbabweans prefer to use the U.S. dollar, given the instability of the local currency, and they also largely choose to keep their money at home.
