Zimbabwe to Launch Gold-Backed Digital Token as Currency Concerns Mount
Zimbabwe is launching gold-backed digital tokens as President Emmerson Mnangagwa’s government struggles to prop up the southern African nation’s inflation-wracked currency months before elections.
The Reserve Bank of Zimbabwe said the tokens would “expand the value-preserving instruments available in the economy”, a reference to a sharp drop in the value of the Zimbabwe dollar.
But the planned launch throws a spotlight on another round of currency chaos driven by the ruling Zanu-PF party’s use of money printing ahead of elections this summer.
The Zimbabwe dollar has lost more than half its value since the end of last year to reach about 2,200 against the US dollar in the country’s parallel market, compared with an official rate of about Z$1,000 that is derived from foreign exchange auctions to importers.
Now Harare is betting on the success of the digital investment, hoping that its backing with gold will damp price pressures in a country that has suffered regular rounds of hyperinflation.
The launch on Monday will follow the issuance last July of physical gold coins as stores of value.
Zimbabwe produced 35 tonnes of gold last year and the central bank is a leading buyer via a gold trading subsidiary. Last week, prices for gold futures matched an all-time high of $2,072 a troy ounce.
Source: Financial Times
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