Zimbabwe will start selling gold coins to the public in an effort to rid the crisis-stricken country of triple-digit inflation following a collapse in the local currency.
The “Mosi-oa-tunya” coins, named after Victoria Falls, will serve as an alternative store of value and can be converted into cash and traded while officials try to support the crumbling Zimbabwean dollar.
The country is desperately trying to combat the crisis caused by inflation reaching almost 200pc in June and a slump in local currency. The Zimbabwean dollar has lost more than two-thirds of its value against the US dollar this year.
The deteriorating situation in the African country has echoes of the economic collapse and hyperinflation that suffered during former dictator Robert Mugabe’s rule. It has one of the highest inflation rates in the world.
The gold coins will be on sale from 25 July and their cost will be based on international gold prices and the cost of production. They will contain one troyons of gold and can be purchased in local or foreign currencies.
Last week, the Zimbabwean central bank raised its key interest rate from 80pc to 200pc because it warned that inflation was threatening to “reverse the significant economic gains made over the past two years”. Zimbabwe has also announced plans to allow the US dollar to be legal tender for five years after diving into the local currency.
Its governor, John Mangudya, said the inflation surge “undermines consumer demand and confidence” while the central bank unveiled plans for an ultra-aggressive tightening of monetary policy to keep inflation in check.
Capital Economics economist Jason Tuvey said it was a “slightly strange policy to implement”.
“In Zimbabwe, what they are basically doing is, as it were, returning to a kind of gold standard, whereby the money is backed by gold,” he said.
While most of the developed world is suffering from high inflation, a small club of countries is struggling with price increases getting out of control. Turkish inflation has reached almost 80pc while the IMF expects Venezuela and Sudan to also endure painfully high price growth.