According to the new Reserve Bank of Zimbabwe Governor, John Mushayavanhu, the country now has $370 million worth of reserves in gold, increasing by 30% in the last 100 days.
“In the 100 days that I have been in office, we have increased those reserves by about 30%. We are now on about $370 million worth of reserves,” Mushayavanhu said in a recent interview.
“These have been increased through royalties that we are collecting from mining companies. We are making steady progress. By the time we get to the end of the year [2024], we should be talking of no less than three tons of gold.”
The gold is backing Zimbabwe’s new ‘structured currency’ called Zim Gold (ZiG), with the aim of addressing rampant inflation and bringing stability to the country’s struggling economy.
In April 2024, as reported by BitKE, the Governor had indicated that the reserves’ value totals $285 million ‘more than three times cover for the ZiG currency being issued.’ The ZiG replaced the Zimbabwean dollar which had lost 80% of its value against the greenback in 2024.
INTRODUCING | Zimbabwe Introduces Zim Gold, the New Currency Backed by Gold and Precious Minerals – https://t.co/ncKtxrEzpg
— Jack Straw (@JackStr42679640) April 8, 2024
The mineral-rich Southern African nation has also scrapped the issuance of gold coins, which it introduced in 2022 as a store of value, to further boost its reserves. Zimbabwe is among several African nations, including Uganda, Nigeria and Madagascar which are either shoring up their gold holdings or considering doing so to protect their currencies and fight inflation.
The Reserve Bank of Zimbabwe🇿🇼 Introduces Gold Coins as Inflation Skyrockets
According to Bloomberg, the coins are a store of value to stabilize the nation’s tumbling exchange rate and offer an alternative to the US dollar, which is in high demand.https://t.co/tPrEJUDshI pic.twitter.com/iDfbj2eQ7F
— BitKE (@BitcoinKE) July 5, 2022
Increasing reserves will allow the central bank to issue more ZiG currency, moving it closer to its goal of reducing the country’s dependence on U.S. dollars.
Mushayavanhu has pledged not to print any ZiG currency unless it is backed by reserves, due to past currency collapses caused by an increased money supply when the central bank issued debt to fund government expenditures.
The Governor stated that the ZiG will become the country’s sole currency once all the necessary conditions are met while President Emmerson Mnangagwa indicated earlier this month [July 2024] that this transition could occur by 2026.
“If we can achieve it in two years, why not? I don’t see any problem with that,” said Governor Mushayavanhu.
The ratio of U.S. dollars used in the economy has already fallen to 80% from 85%, while local currency use has risen to 20% from 15% since the ZiG’s launch, according to Mushayavanhu.
“We are on a de-dollarisation journey.”
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