The Reserve Bank of Zimbabwe (RBZ) has announced a significant increase in the reserve coverage backing the Zimbabwe Gold (ZiG), the country’s new currency, appearing to boost President Emmerson Mnangagwa’s plans to gradually de-dollarise the economy.
According to the RBZ Governor John Mushayavanhu, the reserve coverage has surged by 30% to US$370 million from US$285 million in April.
Speaking to the Sunday Mail newspaper Mushayavanhu said the central bank has been accumulating reserves from gold royalties and other precious minerals like diamonds, lithium, and platinum.
Small-scale miners have also increased their gold deliveries to the Fidelity Gold Refinery following the withdrawal of a 15% value-added tax on gold deliveries.
The increased reserve coverage is expected to provide a strong buffer for ZiG, especially against exchange rate volatility, and build the import cover needed to provide a platform for a sustainable currency.
“As such, the Reserve Bank has been accumulating reserves from royalties of gold and conversion of in-kind royalties of other precious minerals such as diamonds, lithium and platinum to gold reserves,” the Governor told the Sunday Mail.
“As a result, the total reserves have progressively increased by about 30 percent, from US$285 million as at April 5, 2024 to above US$370 million as at the end of June 2024.”
The stability of the ZiG exchange rate has been maintained over the last three months, trading at between ZiG13.2 and ZiG13.7 per US$1.
Mnangagwa has since announced plans to gradually de-dollarize the economy, with the aim of fully penetrating the market with the ZiG currency.
“If you go to the shops to buy with the US dollar, they will refuse it.
“Even those who were performing and entertaining us today, who were being given US dollar tokens, in two months’ time, you will be given the ZiG and no US dollars because that is our currency,” Mnangagwa said.
