Digital Currency To Stabilise Zimbabwe Dollar - Mangudya

Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya said that the gold-backed digital token set to be introduced in the coming weeks will act as a store of value and will also be used for transactions.

Speaking in an interview with The Herald on Thursday, Mangudya said the introduction of the gold-backed digital token is expected to suck excess liquidity from the market and stabilise the Zimbabwe dollar which has been in free-fall on the parallel market. Said Mangudya:

Inflation, which has also declined in US dollar terms, is expected to further decline, so the outlook is very good.

Going forward, inflation will continue to decline due to stabilising local currency, as the RBZ expects to introduce gold-backed digital tokens.

The gold-backed digital token will act as a store of value, and secondly, they can be used for transactions.

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By doing so, this will mop up all the excess liquidity in the market, and stabilise the currency.

The latest statistics from Zimbabwe National Statistics Agency (ZimStat) show that annual inflation declined by 12.4 percentage points to 75.2 percent in April 2023.

However, on a monthly basis, consumer prices increased by 2.4 percent in April, the most in six months, after decreasing by 0.1 percent in the prior month.

Zimbabwe’s annual inflation climbed to a two-year high of 284.94 percent last year while the monthly rate peaked at 30.2.

Since the beginning of 2023, ZIMSTAT has been measuring inflation using a weighted average of items priced in Zimbabwean dollars and United States dollars.

Previously the rate of inflation was based only on items in Zimbabwean dollars.

Last month, former Finance Minister Tendai Biti the government to measure inflation using a weighted average of items priced in Zimbabwean dollars and United States dollars is insincere and an attempt to conceal rising inflation. He said:

Inflation is the measure of the price movement of a good over a period of time. Any good has one price so the blend rate is pure undiluted heresy and is a disingenuous attempt to muddle the ever-rising rate of inflation.

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