Zimbabwe Finance Minister, Mthuli Ncube, has indicated the country’s intention to support its currency with gold reserves.
Following its status as the weakest currency globally and in Africa against the US dollar, the government has explored various strategies to stabilize it since its reintroduction in 2019.
In a recent online press briefing, Ncube shared plans for a conference of African ministers hosted by Zimbabwe, where these monetary strategies, including the gold-backed currency proposal, will be discussed.
President Emmerson Mnangagwa also suggested last week that reforms are under consideration for the under-performing Zimbabwean dollar, which saw a significant depreciation on January 30, 2023, trading over 10,000 against the US dollar.
This decline marked the currency’s most severe depreciation since its 2019 reintroduction, effectively turning anyone in Zimbabwe with $100 into a local currency millionaire.
The government has previously attempted various measures to arrest the currency’s fall, including the introduction of gold coins and digital tokens backed by metal, though these efforts have been met with skepticism by entities like the International Monetary Fund.
Ncube highlighted the consideration of a currency board as a potential solution to stabilize the exchange rate, noting that such a mechanism could offer a durable remedy to the currency’s volatility.
Despite discussions about establishing a currency board a couple of years ago, the plan was not pursued. Since then, the Zimbabwean dollar has continued to perform poorly, experiencing a significant decline against the US dollar.
As of February 13, the currency was trading at Z$11,617 per US dollar, according to central bank data.
In related news, the Nigerian naira has also faced considerable depreciation, ranking among the world’s 15 worst-performing currencies, with a 139.55% decline against the US dollar from January to February 5, 2023, as reported by StatiSense, a data analytics firm.
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