Zimbabwe’s central bank has set a price for its gold-backed digital tokens. The country is planning to sell its gold-backed digital currency to investors starting May 8. The tokens will be sold at a minimum price of $10 for individuals and $5,000 for corporates and other entities.
According to a statement released by the Reserve Bank of Zimbabwe on May 4, the gold-backed digital currency tokens will be sold in both U.S. dollars and local currency. However, the local currency price will have a 20% margin above the willing-buyer willing-seller interbank mid-rate. Interested investors can participate in the offer from May 8, and it will close two days later.
The willing-buyer willing-seller interbank mid-rate is the exchange rate at which banks are willing to buy and sell currencies to each other. It is considered the “midpoint” between the buying and selling rates, and it’s determined based on prevailing market conditions such as supply and demand. This rate is used as a benchmark for many financial transactions and is often used as a reference rate for exchange rates quoted by banks and financial institutions.
The Reserve Bank of Zimbabwe announced its plans to introduce a gold-backed digital currency to serve as legal tender in the country on April 28.
The introduction of digital tokens is the latest move by the southern African nation to support its own local currency, which according to Bloomberg, has weakened 37% against the USD on the official market this year.
The plan was approved by the monetary policy committee in March, eight months after Zimbabwe introduced gold coins as a store of value to try to help support the local unit.
According to a Bloomberg report, Zimbabwe’s currency, the ZWL, is quoted at 1,001 against the USD, but it is commonly exchanged at 1,750 on the streets of Harare, the capital city of the country.
Zimbabwe has been battling currency instability and high inflation rates for more than ten years. After a period of hyperinflation, the country adopted the USD in 2009. In an attempt to revive the struggling economy, the Zimbabwean dollar was reintroduced in 2019. However, last year, the government reverted back to using the USD to control rising prices.
It is worth noting that Nigeria introduced its own digital currency in 2021, becoming the first African nation to do so.