After Applying to BRICS, Zimbabwe Aims To Back Currency With Gold

Vinod Dsouza
gold price us dollar
Source: Finbold

Zimbabwe had applied to join the BRICS alliance and the decision for its induction could be taken this year. Also, Zimbabwe had applied for the BRICS bank, commonly called the ‘New Development Bank’ (NDB) for loan sanctions. The BRICS bank confirmed that they aim to start disbursing loans in local currencies to help developing countries end dependency on the US dollar. On the heels of the BRICS bank announcement, Zimbabwe started to accumulate tons of gold in its Central Bank reserves.

Also Read: BRICS: Nigeria Plans To Sell Oil in Local Currency, Not US Dollar

The Central Bank in Zimbabwe has accumulated nearly a ton of gold in its reserves since 2022. The country is piling up on the precious metal in a similar fashion to that of the BRICS alliance. For the uninitiated, BRICS is the world’s largest buyer of gold in 2023 as China, Russia, and India, massively accumulated the precious metal. Read here to know how many tons of gold the BRICS bloc purchased last year in 2023.

Also Read: BRICS: US Dollar Ranks 10 Out of 180 Global Currencies

BRICS: Zimbabwe Looks To Back Their Local Currency With Gold

Zimbabwe flag
Source: Coindesk

Bloomberg reports that Zimbabwe plans to back its local currency, the Zimbabwean Dollar with gold. Currently, the majority of the population in Zimbabwe uses the US dollar for daily transactions. Zimbabwe abandoned its inflation-ravaged dollar in 2009 and opted to use foreign currencies like the US dollar to sustain itself.

Also Read: BRICS: US Dollar Settlement Declines 67% in Russia

Things could take a U-turn if Zimbabwe backs its local currency with gold and reduce reliance on the US dollar. Zimbabwe’s move takes a leaf from the playbook of BRICS which also considers backing their yet-to-be-released currency with gold. Therefore, gold could play an important role in the functioning of BRICS, Zimbabwe, and other developing countries.

Read here to know how many sectors in the US will be affected if BRICS ditches the dollar for trade. The 16th BRICS summit will be held in October 2024 in the Kazan region of Russia.