Zimbabwe’s central bank to mint 22-carat gold coins in the fight against hyperinflation. That announces the regulator on Wednesday. Prices have risen more than 190 percent in the African country in a year. Zimbabwe previously raised its policy rate to 200 percent in the hope that people would leave their money in their savings account.
With the introduction of the gold coin, people can exchange their banknotes for a one-ounce coin (31.10 grams), so they don’t have to walk around with bags full of money to go to the supermarket. The coins will be worth about as much as the gold price at that time. That currently amounts to about 1,721 euros or 569 Zimbabwean dollars per ounce.
The coin is named Mosi-oa-Tunya, which roughly translates as ‘the thunder smoke’, a reference to the Victoria Falls on the Zimbabwe-Zambia border. The currency can be purchased through the central bank.
Zimbabwe has been struggling with skyrocketing inflation for some time. Last month it rose to 191.6 percent and the Zimbabwean dollar has been worth two-thirds less than the US dollar since the beginning of this year. The rising inflation in Zimbabwe has more or less the same causes as in other countries, only it turns out much worse. In the Netherlands inflation is 9.9 percent.
Last week, the country raised its key rate from 80 to 200 percent to keep prices down. The reasoning is that at a higher interest rate people spend their money less quickly because they earn more on their savings account. This depresses demand and therefore prices.
By way of comparison: the European Central Bank (ECB) recently raised interest rates from -0.5 percent to -0.25 percent and in the US the policy rate is 1.75 percent. The interest rate in Turkey, a country that also suffers from high inflation, is 14 percent.
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