Zimbabwe’s Government considers using gold to back its currency

Zimbabwe may back its currency with gold in an effort to end exchange-rate instability, Finance Minister Mthuli Ncube said.

“In order to manage growth of liquidity, we may link the exchange rate to a hard asset such as gold,” Ncube said in an online press briefing held Monday to announce a conference of African ministers that Zimbabwe will host at the end of this month.

Zimbabwean President Emmerson Mnangagwa last week signaled the authorities are considering a revamp of the world’s worst-performing currency. He said the Treasury and monetary authorities are working on a “structured currency.”

The president sought to provide “policy forward guidance” to the market on currency and monetary policy reforms that are being considered, Ncube said in his first remarks since Mnangagwa’s comments on Feb. 6. The southern African nation is also weighing the feasibility of establishing a currency board, he said.

“This will provide a lasting solution to the volatility” of the exchange rate, Ncube said.

The Zimbabwe dollar has slumped almost 50% against the dollar this year after plunging 90% in 2023, making it the world’s worst-performing currency over the period. It traded at Z$11,617 per US dollar on Monday, according to data posted on the central bank’s website.