According to state-run Sunday Mail, Zimbabwe is set to introduce a gold-backed digital currency with the aim of stabilising its local unit against the continued depreciation of the US dollar.
Central bank governor John Mangudya has reportedly stated that the tokens will enable those with small amounts of Zimbabwe dollars to exchange their currency for digital tokens that can store value and hedge against currency volatility.
Mangudya added that the introduction of the tokens will ensure that even those with low amounts of currency can purchase gold units, so that no one and no place is left behind. This move follows the introduction of gold coins last year, which aimed to mop up excess liquidity and stabilise the local unit.
Although the official exchange rate for the local currency is Z$1 000.4 against the dollar, it readily changes hands at Z$1 750 on the streets of the capital. Mangudya attributed the current exchange rate volatility to expectations of increased foreign currency supply in the market when the tobacco auction season started in March. Zimbabwe has exported 54.9 million kilograms of tobacco valued at US$307 million since the start of the auction season, compared to 57 million kilograms valued at US$295.5 million during the same period last year.
Zimbabwe abandoned its currency in 2009 due to hyperinflation, replacing it mainly with the US dollar. The Zimbabwe dollar was reintroduced in 2019 to revive the stagnating economy, but the government decided in June to make the greenback legal tender again to try and tame rampant price increases.