According to a report by the state-run Sunday Mail, Zimbabwe is set to launch a gold-backed digital currency in an effort to stabilize the local currency against the US dollar. Central bank governor John Mangudya stated that the move will allow those with small amounts of Zimbabwe dollars to exchange their money for digital tokens and hedge against currency volatility.
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The tokens will enable individuals with lower amounts of currency to purchase gold units so that everyone can benefit, regardless of their location or financial status. This comes after the country introduced gold coins last year to help stabilize the economy by absorbing excess liquidity.
Despite the official exchange rate being Z$1 000.40 to the dollar, the local currency is traded at Z$1 750 on the streets of the capital. Mangudya explained that the current exchange rate volatility is due to the anticipation of an increase in foreign currency supply in the market during the tobacco auction season, which began in March.
The country has exported 54.9 million kg of tobacco valued at US$307 million since the start of the auction season, compared to 57 million kg worth $295.5 million during the same period last year. In 2009, Zimbabwe abandoned its currency and replaced it primarily with the US dollar following hyperinflation that rendered the local currency worthless.
In 2019, the Zimbabwe dollar was reintroduced to revive the economy, but the government made the US dollar legal tender again in June to combat rampant price increases.