Zimbabwean authorities will peg the currency to gold after its fall against the US dollar

Today, April 5, the government of Zimbabwe is a plan to bring the local currency, the Zimbabwean dollar, which has fallen in price against the US dollar by 73% this year alone, out of a protracted crisis. The difficult situation in the country’s economy has led to the fact that Zimbabwean citizens increasingly prefer to store funds not in the local dollar, but in the US dollar. Such situation brought to a significant difference between the official rate and the rate on the black market – about 60%. If the official exchange rate of the Central Bank of Zimbabwe is 22.5 thousand Zimbabwean dollars to $1, then you can buy currency in person for 36 thousand Zimbabwean dollars per $1.

According to the Zimbabwean government, pegging the currency to gold could stabilize the local market and reduce demand for US dollars. The new head of the Central Bank of Zimbabwe, John Mushayakarara, previously reported to the country’s President Emerson Mnangagwa that everything was in order with the country’s gold and foreign exchange reserves. According to him, the gold reserves of the Central Bank amount to 2.5 tons. “In addition, we have other precious minerals – diamonds, etc. – equivalent to approximately 400 kg of gold. There are also gold reserves that are stored abroad – this is about 1 ton of gold,” said the head of the Central Bank of Zimbabwe.

Read more about the monetary crisis in Zimbabwe in the Kommersant publication “The money crisis in Zimbabwe has hit the streets”.

Evgeny Khvostik