Gold Coins suffocate parallel market activities

By Davison Vandira

THE recently introduced Reserve Bank of Zimbabwe Gold Coins have achieved their intended objective inside a month after ensuring exchange rate stability and strengthening the value of the Zimbabwe dollar.

A month ago, the Reserve Bank of Zimbabwe (RBZ) introduced the Mosi-oa-Tunya Gold Coins with multi-dimensional objectives, chief among them mopping up of excess liquidity which was a fertile ground for parallel market activities and strengthening the local currency.

In line with the central bank’s script, the gold coins have achieved the desired results as they have pinned the parallel market rate below the ZWL800 mark, thereby instilling confidence in the Zimbabwean dollar and strengthening the value of the local currency.

According to RBZ Monetary Policy Committee Member Mr Persistence Gwanyanya, more than 5 000 gold coins have been sold to date, mopping up ZWL4 billion of excess liquidity in the market which has ironically created demand for the local currency.

“The results of the gold coins have been exceptional in that they have managed to stop the skyrocketing parallel market which is devoid of any fundamentals hence the obtaining situation is encouraging and commendable for the benefit of the whole country,” he said.

The scarcity of the Zimbabwean dollar is forcing companies and individuals who are sitting on large sums of the greenbacks to release them into the market for circulation, thereby creating real economic activities for the benefit of citizens.

“We are also seeing a trend whereby companies are now opting to pay salaries and services using the US dollar and this is a good situation for the country whereby foreign currency is readily available for those who need it,” he added.

More interestingly, there has been a movement of convergence between the parallel market rate and the official exchange rate which currently sits at ZWL521 per every one US$.