The Reserve Bank of Zimbabwe (RBZ) is working on a new plan to save the plummeting local currency. According to media reports, the central bank plans to introduce a new currency backed by gold tokens as it works to stabilize the Zimbabwe dollar.
The report, first published by Times, said that the digital gold tokens will be backed by gold held at the central bank. As a result, people holding a small amount of Zimbabwe dollars, which has been losing value, will exchange them for these tokens. In a statement, the central bank governor said:
“The movements in the parallel market rate are mainly because of expectations of increased foreign currency supply when the tobacco marketing season starts. However, the supply of foreign currency in the past three week has been lower than expected.”
The Zimbabwe dollar has lost its value against the USD in the past few months. According to the central bank, one USD is worth about 1,000 Zimbabwe dollars. However, getting that exchange rate is difficult since the parallel market pegs it at over 1,750, as I wrote here.
The fact that the Zimbabwe dollar has no value is sad considering that the country has some of the biggest natural resources. For example, Zimbabwe has the second biggest gold reserves per square kilometer, with 13 million tons of proven reserves. Yet the country has only exported 580 tons since 1980.
At the same time, the country has some of the biggest reserves of platinum group metals (PGMs) like platinum and palladium that are used in the auto industry. Most importantly, it has an important role in the electric vehicle (EV) industry because of its high lithium and nickel deposits.
Zimbabwe is also a key player in the agricultural sector. For example, it is a top exporter of tobacco. In 2023, the country has exported 54.9 kgs of tobacco worth $307 million, higher than the $295 million it exported in 2022.
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