Zimbabwean dollar
Encyclopedia
The Zimbabwean dollar was the official currency
of Zimbabwe
from 1980 to 12 April 2009.
Although the dollar was considered to be among the highest valued currency unit
s when it was introduced in 1980 to replace the Rhodesian dollar
at a ratio of 1:1, political turmoil and hyperinflation
rapidly eroded the value of the Zimbabwe dollar to become one of the least valued currency unit
s in the world, undergoing three redenomination
s, with paper denominations including a $100 trillion banknote. The third redenomination produced the "fourth dollar" (ZWL) which was worth 1 trillion ZWR (third dollar), so overall the ratio of the redenominations was 103 × 1010 × 1012 = 1025.
Despite attempts to control inflation by legislation, and three separate redenomination
s in 2006, 2008 and 2009, the use of the dollar as an official currency was effectively abandoned on 12 April 2009. This was a result of the Reserve Bank of Zimbabwe legalizing the use of foreign currencies for transactions in January 2009.
Currencies such as the South African rand
, Botswana pula
, pound sterling
, euro
, and the United States dollar
are now used for all transactions in Zimbabwe; the policy of the government of Zimbabwe has insisted that any attempts to reintroduce Zimbabwean currency should be considered only if industrial output improves.
was essentially equal to half of a pound sterling
when it was adopted during the decimalisation of 1970, the same practice which was used in other Commonwealth
countries such as South Africa
, Australia
, and New Zealand
. The selection of the name was motivated by the fact that the reduced value of the new unit correlated more closely to the value of the US dollar than it did to the pound sterling
.
at par. The initial ISO 4217
code was ZWD. At the time of its introduction, the Zimbabwean dollar was worth more than the U.S. dollar, with ZWD 1 = USD 1.47 However, the currency's value eroded rapidly over the years. On 26 July 2006, the parallel market value of the Zimbabwean dollar fell to one hundred to the British pound
.
, Dr. Gideon Gono
, announced that "Zimbabwe will have a new currency next year." New banknotes and coins were to replace the then current Zimbabwean dollar. Gono did not provide a name for this new currency. In June 2006, Deputy Finance Minister David Chapfika stated that Zimbabwe had to achieve macroeconomic stability (i.e., double digit inflation) before any new currency was introduced.
The dollar was redenominated on 1 August 2006 at the rate of 1 revalued dollar = 1000 old dollars. The new dollar was subdivided into 100 cents, although cents were not used in practice. Together with the redenomination, the government devalued the dollar by 60% against the US dollar (see exchange rate history table below), from 101,000 old dollars (101 revalued) to 250 revalued dollars. ISO originally assigned a new currency code of ZWN to this redenominated currency, but the Reserve Bank of Zimbabwe could not deal with a currency change. Therefore the currency code remained 'ZWD'. The revaluation campaign, which Gideon Gono named "Operation Sunrise" was completed on 21 August 2006. It was estimated that some ten trillion old Zimbabwe dollars (22% of the money supply
) were not redeemed during this period.
On 12 December 2006, Gono hinted in a memorandum to banks and other financial institutions that he would lay out the next phase of his monetary reforms dubbed Project Sunrise Two when he announced the monetary policy review statement in January 2007. It was not possible to get immediate confirmation from Gono's office whether the memorandum was advice to banks that he would be launching the new currency in January. But the chief executive officer of one of the country's largest banks said industry players had understood the governor's memo to mean new money would be introduced next month. A possible name appeared to be "ivhu", which means "soil" in Shona
.
The following year, on 2 February 2007, the RBZ revealed that a new (third) dollar would be released soon and gave some details of the new banknotes (see below). However, with inflation at the time still in the four digits, the banknotes remained in storage. During the same month, the Reserve Bank of Zimbabwe declared inflation illegal, outlawing any raise in prices on certain commodities between 1 March and 30 June 2007. Officials arrested executives of some Zimbabwean companies for increasing prices on their products. Economists generally suspect that such measures are ineffective at eliminating the problem in the long term.
Economist Eddie Cross reported on 15 June 2007 that "There is talk that the Reserve Bank will cut another three zeros off our currency next week and this would mean that one Zimbabwe dollar would now equal one million of the old dollars. Chaos reigns in commerce and industry and those in the public sector are frantic."
The Zimbabwe dollar was again devalued on 6 September 2007, this time by 92%, to give an official exchange rate of ZW$30,000 to US$1, although the black market exchange rate was estimated to be ZW$600,000 to US$1.
Meanwhile the WM/Reuters company introduced a notional exchange rate (ISO ZWN) which more accurately reflected black market exchange rates. Since there was a shortage of foreign exchange in the country the official rate was nearly impossible to obtain. The method of calculation was based on Purchasing Power Parity utilizing the dual listing of companies on the Harare (ZH) and London Stock exchanges (LN).
In particular, the Old Mutual Implied Rate (OMIR) was calculated by dividing the Zimbabwe Stock Exchange price of shares of the insurance company named "Old Mutual" by the London Stock Exchange Price for the same share.
Reserve bank governor Gideon Gono announced on 30 July 2008 that the Zimbabwean dollar would be redenominated
. Effective August 1, 2008, ZW$10 billion would be worth ZW$1; the new currency code was ZWR. The planned denominations to be issued are coins valued Z$5, Z$10 and Z$25 and banknotes worth Z$5, Z$10, Z$20, Z$100 and Z$500. While the German firm of Giesecke & Devrient
was no longer printing Zimbabwean currency, The Daily Telegraph
reported that the new currency was printed before the relationship was severed and had been kept in storage since then.
Due to frequent cash shortages and the worthless Zimbabwean dollar, foreign currency was effectively legalised as a de facto currency on 13 September 2008 via a special program to officially license a number of retailers to accept foreign money. This reflected the reality of the dollarization
of the economy, with many shop keepers refusing to accept Zimbabwe dollars and requesting U.S. dollars or South African rand instead. Despite redenomination, the RBZ was forced to print banknotes of ever higher values to keep up with surging inflation, with ten zeros reappearing by the end of 2008 (see below).
The Zimbabwean dollar had become largely irrelevant, with the economy being almost completely dollarized
. Even the national postal service, Zimpost, was said to be charging customers postage in US Dollars, even though some of the stamps were in Zimbabwean Dollar denomination.
Zimbabwe finance minister, Tendai Biti
, said in his first budget report, "The death of the Zimbabwe dollar is a reality we have to live with. Since October 2008 our national currency has become moribund."
In late January 2009, acting Finance Minister Patrick Chinamasa
announced that all Zimbabweans would be allowed to conduct business in any currency as a response to the hyperinflation crisis.
On April 12, 2009, media outlets reported that economic planning minister Elton Mangoma
had announced the suspension of the local currency "for at least a year", effectively terminating the fourth dollar.
and the collapse of the economy severely devalued the currency, with many organizations using the United States dollar
, the euro
, the pound sterling
, the South African rand
, or the Botswana pula
instead. Early in the 21st century, Zimbabwe started to experience hyperinflation
. Inflation reached 623% in January 2004, then fell back to low triple digits in 2004 before surging to 1,281.1% in 2006.
Inflation reached another record high of 3714% (year-on-year) in April 2007. The monthly rate for April 2007 exceeded 100%, implying that inflation may soon exceed all forecasts, as 100% monthly inflation over sustained 12 months would produce annual inflation of over 400,000%. Mid-year inflation for 2007 has been breaching records as inflation for May 2007 was estimated at 4,530% (year-on-year).
On 21 June 2007, the United States
ambassador to Zimbabwe, Christopher Dell
, told The Guardian
newspaper that inflation could reach 1.5 million percent by the end of the year. The unofficial inflation rate at that time was above 11,000%, and the black-market exchange rate was Z$400,000 to the pound.
On 13 July 2007, the Zimbabwean government said it had temporarily stopped publishing (official) inflation figures, a move that observers said was meant to draw attention away from "runaway inflation which has come to symbolise the country's unprecedented economic meltdown."
On 27 July 2007, the Consumer Council of Zimbabwe (CCZ) said its recent calculations for the monthly expenditure for an urban family of six showed that inflation for the month of June was more than 13,000%. The Central Statistical Office (CSO), the official source of Consumer Price Index numbers, had not released its figures since February (2007) when it reported annual inflation at 1,729%.
In September 2007, the Central Statistical Office announced an official inflation rate of 6,592.8% for August 2007. Private estimates were as high as 20,000%. In October 2007, they announced an official inflation rate of 7,892.1% for September 2007. In November 2007, they announced an official inflation rate of 14,840.5% for October 2007.
On 27 November 2007, the chief statistician of the Central Statistical Office, Moffat Nyoni, announced that it would be impossible to calculate the inflation rate of the dollar any further. This was due to the lack of availability of basic goods, and subsequent lack of information from which to calculate the inflation rate; plus, most computers had an insufficient number of digits and software. The International Monetary Fund
stated that inflation was predicted to rise to 100,000% per annum.
On 14 February 2008, the Central Statistical Office announced that the inflation rate for December 2007 was 66,212.3%, and the unofficial exchange rate was Z$7.1 million to the US$1.
On 20 February 2008, the Central Statistical Office said that officially, inflation has in January 2008 gone past the 100,000% mark to 100,580.2%.
On 4 April 2008, the Financial Gazette (FinGaz) reported that officially, inflation in February 2008 jumped to 164,900.3%.
On 15 May 2008, the Zimbabwe Independent reported that officially, inflation in March 2008 jumped to 355,000%.
On 21 May 2008, SW Radio Africa reported that, according to an independent financial assessment inflation in May 2008 jumped to 1,063,572.6%. The state statistical service has said there are not enough goods in the shortage-stricken shops to calculate any new (official) figures.
On 26 June 2008, the Zimbabwe Independent reported that, latest figures from the Central Statistical Offices (CSO) showed that annual inflation rose by 7,336,000 percentage points to 9,030,000% by June 20 and was set to end the month at well above 10,500,000%.
The Sydney Morning Herald
reported that inflation was likely to be 2 million percent in May 2008 and 10-15 million percent in June 2008, according to John Robertson, a respected Zimbabwean economist. Robertson estimated inflation in July 2008 to be 40-50 million percent. Inflation can only be estimated because of the impossibility of following the cost of individual goods.
According to Central Statistical Office statistics, annual inflation rate rose to 231 million percent in July 2008. The month-on-month rate rose to 2,600.2%. By December 2008, inflation was estimated at 6.5 quindecillion novemdecillion percent (65 followed by 107 zeros).
As predicted by the quantity theory of money
, this hyperinflation has been caused primarily by the Reserve Bank of Zimbabwe's choice to mushroom the money supply.
Since February 2009, following a period of hyperinflation
and widespread rejection of the devalued currency, companies and individuals are permitted to transact domestic business in other currencies, such as the US dollar
or the South African rand
. In consequence, the Zimbabwean economy has undergone dollarization
and the Zimbabwean dollar has fallen out of everyday use.
On 16 February 2006, the governor of the Reserve Bank of Zimbabwe
, Gideon Gono, announced that the government had printed ZW$20.5 trillion in order to buy foreign currency to pay off IMF
arrears
. In early May 2006, Zimbabwe's government announced that they would produce another ZW$60 trillion. The additional currency was required to finance the recent 300% salary increase for soldiers and policemen and 200% increase for other civil servants. The money was not budgeted for the current fiscal year, and the government did not say where it would come from. On 29 May, Reserve Bank officials told IRIN that plans to print about ZW$60 trillion (about US$592.9 million at official rates) were briefly delayed after the government failed to secure foreign currency to buy ink and special paper for printing money.
In late August 2006, it was reported that about ZW$10 trillion old dollars (22% of the money supply) had not been exchanged for revalued dollars. These bearer cheques were demonetised.
On 27 June 2007, it was announced that central bank governor Gideon Gono
had been ordered by President Robert Mugabe
to print an additional ZWD$1 trillion to cater for civil servants' and soldiers' salaries that were hiked by 600% and 900% respectively.
On 28 July 2007, it was reported that Mugabe has said that Zimbabwe
will go on printing money if there is not enough for underfunded municipal projects.
On 30 August 2007, it was reported that an additional ZW$3 trillion had been printed to pay for 500,000 scotch carts and 800,000 ox-drawn ploughs plus an unspecified number of cattle.
On 3 September 2007, it was reported that the black market in Zimbabwe is once again booming despite price controls. People who previously were employed for US$11 (ZW$2 Million) a month are now able to turn as much as US$166 (ZW$30 Million) just through black market trading.
On 24 November 2007, it was reported that money supply was now $58 trillion revalued Zimbabwean dollars (ZWD) ($41 million US at parallel rates). However, Zimbabwe banks could only account for $1 to $2 trillion of those dollars, meaning that members of the public were holding $56 to $57 trillion in cash.
On 4 January 2008, it was reported that money supply had been increased by $33 trillion (to $100 trillion) revalued Zimbabwean dollars (ZWD) Further, the demonetization of the $200,000 bearer cheques was put on hold, thus increasing the money supply.
The planned issue of additional banknotes (denominations of ZWD 1, 5, and 10 Million) on 18 January 2008 will increase the money supply by an unknown amount.
On 21 January 2008, it was reported, by Gideon Gono, that the money supply had been increased to ZW$170 trillion since the middle of December. Further, Gono expected it to reach $800 trillion by 28 January 2008.
On 1 March 2008, it was reported that documents obtained by The Sunday Times show the Munich company Giesecke & Devrient
(G&D) was receiving more than €500,000 (£382,000) a week for delivering bank notes equivalent to $170 trillion a week.
According to a source at the Reserve Bank of Zimbabwe, G&D was delivering 432,000 sheets of banknotes every week to Fidelity printers in Harare, where they were stamped with the denomination. Each sheet contains 40 notes and the current production is entirely in Z$10M notes. On 1 July 2008, Giesecke & Devrient responded to pressure from the German government by suspending production of bank notes for Zimbabwe.
In the Guardian
, on 18 July 2008, a report on Zimbabwe's inflation, said that an egg costs ZW$50 billion (GBP 0.17, USD 0.32), and it showed adverts for prizes of Z$100 trillion in a Zimbabwean derby and ZW$1.2 quadrillion
($1,200,000,000,000,000.00: approx. GBP 2,100; USD 4,200) in a lottery
. It also showed a monthly war pension currently is ZW$109 billion (GBP 0.37, USD 0.74), shops can only cash cheques if the customer writes double the amount, because the cost will go up by the time the cheque has cleared, and people can only withdraw a maximum of ZW$100 billion from cashpoints.
On 23 July 2008, an Austro
-Hungarian
company based in Vienna
confirmed that it is providing the Reserve Bank of Zimbabwe with the licences and software required to design and print Zimbabwe currency. The company, named Jura JSP, said it would consider ending its supply of licences and software if the European Union required it to do so. Without the licences and software, the Reserve Bank of Zimbabwe may be unable to print notes in larger denominations than are already in circulation.
On 24 July 2008, the Reserve Bank of Zimbabwe announced that "appropriate measures are being put in place to address the current setbacks being faced on the currency front, as well as on financial and accounting systems." It promised that in "the next few days" it would institute changes to the minimum cash withdrawal limits and IT systems' constraints. Currently, the government limits cash withdrawals to ZW$100 billion per day, which is less than the cost of a loaf of bread. IT systems cannot handle such large numbers; the automated teller machine
s for one major bank give a "data overflow error" and freeze customers attempt to withdraw money with so many zeros. That same day, the Institute of Commercial Management reported that ZW$1.2 trillion is worth the same as one British pound.
From January to December 2008, the money supply growth rose from 81,143% to 658 billion percent.
and price speculation. The move led to a sharp drop in the usage of the Zimbabwean dollar, as hyperinflation rendered even the highest denominations worthless.
On 2 February 2009 the Zimbabwean dollar was redenominated once more, at the ratio of 1 000 000 000 000 (1012) ZWR to 1 ZWL. The third dollar was expected to be demonetised on 1 July 2009, but the complete abandonment of local currency was hastened by the decline in overall consumer usage of local currency in favour of other currencies, helped by the legalization of the use of hard currencies in January 2009.
The dollar was effectively abandoned as an official currency on 12 April 2009 when the Economic Planning Minister Elton Mangoma confirmed the suspension of the national currency for at least a year, but exchange rates with the Zimbabwean dollar were maintained for up to a year afterwards. The current government of Zimbabwe said that the Zimbabwean currency should only be reintroduced if the industrial output was 60% or more of its capacity, compared to the April 2009 average of 20%.
Plans by the Reserve Bank of Zimbabwe, for new Z$5,000 and Z$10,000 coins were announced in June 2005. However, the coins never appeared.
All old coins dating from the first dollar were reintroduced at face value to the third dollar in Aug 2008, effectively increasing their value 10 trillion-fold, and new $10 and $25 coins were introduced. These coins were minted in 2003 but only issued with the redenomination.
The banknotes of the Zimbabwean dollar were issued by the Reserve Bank of Zimbabwe
from 1980 to 2009. Up to 2003 regular banknotes were issued but as hyperinflation
developed from 2003, the Reserve Bank issued short-lived emergency travellers cheques, which were then quickly superseded by time-limited Bearer Cheques, in denominations ranging from $5 000 to $20 000 in 2003, then up to $100 000 dollars by early-2006.
On 1 August 2006, new Bearer cheques with thirteen denominations ranging from 1¢ to $100 000 were issued following the first redenomination of the dollar, superseding the regular banknotes by 21 August 2006 and until August 2008. Bearer cheques of 5,000 dollars (dated 1 February 2007) and 50,000 (dated 1 March 2007) were issued in March 2007, followed by cheques of 200,000 (dated 1 August 2007) in August 2007. Subsequently, Gideon Gono
of the RBZ announced on 19 December 2007 that new bearer cheques (Z$250,000; Z$500,000; and Z$750,000) had been produced and would be released on 20 December. Additionally, the current high value bearer cheques (Z$200,000) would be demonetised as of 1 January 2008. However, due to ongoing problems, plans to demonetise this note were put on hold at the end of December.
Since the Zimbabwean dollar was revalued in August 2006, there were repeated discussions and proposals regarding a further revaluation. As early as the beginning of 2007 it appeared that a revaluation was planned with new banknote designs being commissioned. New plans were announced in October 2007 They were initially postponed until 2008 before, in November 2007, the revaluation was described as "imminent" and would remove as many as four zeros from the currency and would be called Sunrise 2. However, on 18 December 2007, it was reported that a further printing of the current Z$200,000 bearer cheques had been produced, seemingly instead of revaluing. Further new issues of bearer cheques have since taken place.
At a press conference on 16 January 2008, reserve bank Governor Gono stated that "With effect from Friday (January 18), the Reserve Bank of Zimbabwe is releasing the following bearer cheques into circulation: one million dollars (officially worth about US$33/22 euros but worth about 50c at the parallel rate), five million dollars and 10 million dollars." He continued, "...daily cash withdrawals have been increased from the current Z$50 million to Z$500 million per individual." Less than a month after announcing a similar move, Gono said the new notes would provide much needed relief to consumers who often have to go shopping with sacks of cash.
The Zim Independent and Zim Online reported on 4 April 2008 that 25 and 50 million dollar bearer cheques were issued on 4 April. The RBZ also increased the maximum withdrawal limit for individuals to $5 billion a day. On 6 May, 100 million dollar and 250 million dollar bearer cheques were issued and the official exchange rate was floated to counter black market speculation. 10 days later, the RBZ announced that 500 million dollar bearer cheques and special agro cheques in the amounts of 5, 25, and 50 billion dollars would be issued were to be issued on 20 May.
On 14 July 2008 Giesecke & Devrient
ceased supplying bank note paper to Fidelity Printers & Refiners, the Zimbabwean government-owned company that printed Zimbabwean currency. Virtually incessant use of the currency-printing presses have caused many of the machines to break down, and repair parts are no longer being shipped to Zimbabwe to repair the machines. The Reserve Bank issued the $100 billion Agro Cheque on 21 July, which were printed prior to the suspension.
On 30 July 2008 the RBZ announced a new currency, effective 1 August 2008, removing 10 zeros from the monetary value, by "a factor of 1 to 10". Banknotes in the denominations of $1, $5, $10, $20, $100 and $500 were introduced and replaced bearer cheques and agro cheques by 31 December 2008. However, the familiar cycle of printing ever higher denomination notes to keep up with inflation continued despite redenomination
. A $1,000 banknote was introduced by the RBZ on 19 September 2008, and ten days later, as the unofficial exchange rate surpassed 270,000 ZWD to the US dollar, it issued new notes in the denominations of $10,000 and $20,000. A $50,000 banknote was released on 13 October 2008, followed by $100,000, $500,000, and $1,000,000 denominations announced on 3 November. The daily cash withdrawal limit was raised for individuals to Z$500,000 from Z$50,000 and for select companies it went up to $1 million. Banknotes valued at $10 million, $50 million and $100 million were issued as the withdrawal limit was increased to $100 million per week on 4 December 2008. Scarcely four days later, on 8 December, the RBZ issued a $200 million banknote, and introduced a $500 million note on 12 December, worth approximately US$8 at the time. In little over half a year, the billion denomination returned, with the RBZ issuing banknotes of $1 billion, $5 billion, and $10 billion on 19 December.
Amid the continuing hyperinflation that rendered the currency virtually worthless, spurring the increasing dollarization
of the economy, the RBZ issued another set of new notes in denominations of $20 billion and $50 billion to be released 12 January. Stepping up another order of magnitude, the Reserve Bank introduced trillion-denominated notes for the first time, unveiling banknotes valued at $10 trillion, $20 trillion, $50 trillion, and $100 trillion on 16 January, which were supposed to help citizens still in formal employment to withdraw a full month's worth of salary by showing a corresponding payslip. As even these notes became increasingly worthless, a media campaign was launched in South Africa using the notes as printing paper
.
On 2 February 2009 the dollar was revalued
once more, this time in the ratio of 1:1012, and new banknotes of the fourth dollar, with seven denominations from $1 to $500, were issued. These banknotes circulated alongside the third dollar until the abandonment of the dollar on 12 April 2009.
† Due to the December 2007 banknote shortage, funds transferred via Electronic Funds Transfer Systems (EFTS) bore a premium rate of about $4 million, while the cash transaction rate varied around $2 million.
‡ Exchange rate was 20,000,000 for large amounts.
The third dollar rates above are OMIR. The cash rate differs significantly to the above rates. The table below is the cash rate of the third dollar history:
This table shows in more detail the historical value of one U.S. dollar in Zimbabwean dollars:
More detailed data can be found in the table below :
and Oanda began publishing floating rates based on Zimbabwe's formally regulated domestic bank market, while Yahoo Finance started using the updated official rate in July, albeit with a decimal point shift of 6 places. Those reported rates generally reflected the Official Rate as shown in the above table. They soon began to differ, in overvaluation of the Zimbabwean dollar, increasingly substantially in comparison to less regulated markets such as offshore markets or paper cash freely traded on the streets of Harare, reflected above as Parallel Rates.
suspended temporarily the Real Time Gross Settlement
(RTGS) system, halting electronic parallel market transfers, but it was reinstated on November 13, 2008.
After being introduced on August 1, 2008, the third dollar continued to devalue.
An overview of the exchange rate data can be found in the table below :
Currency
In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...
of Zimbabwe
Zimbabwe
Zimbabwe is a landlocked country located in the southern part of the African continent, between the Zambezi and Limpopo rivers. It is bordered by South Africa to the south, Botswana to the southwest, Zambia and a tip of Namibia to the northwest and Mozambique to the east. Zimbabwe has three...
from 1980 to 12 April 2009.
Although the dollar was considered to be among the highest valued currency unit
Highest valued currency unit
The highest-valued currency unit is the currency in which a single unit buys the highest number of any given other currency or the largest amount of a given good...
s when it was introduced in 1980 to replace the Rhodesian dollar
Rhodesian dollar
The dollar was the currency of Rhodesia between 1970 and 1980. It was subdivided into 100 cents.-History:The dollar was introduced on February 17, 1970, less than a month before the declaration of a republic on March 2, 1970. It replaced the pound at a rate of 2 dollars to 1 pound...
at a ratio of 1:1, political turmoil and hyperinflation
Hyperinflation
In economics, hyperinflation is inflation that is very high or out of control. While the real values of the specific economic items generally stay the same in terms of relatively stable foreign currencies, in hyperinflationary conditions the general price level within a specific economy increases...
rapidly eroded the value of the Zimbabwe dollar to become one of the least valued currency unit
Least valued currency unit
The least valued currency unit is the currency in which a single unit buys the least number of any given other currency or the smallest amount of a given good. Most commonly, the calculation is made against a major reserve currency such as the United States dollar or the euro...
s in the world, undergoing three redenomination
Redenomination
Redenomination is the process of changing the face value of banknotes or coins used in circulating currency.When redenomination occurs, financial data that spans the change must be correctly accounted for. For example, the GDP is properly documented....
s, with paper denominations including a $100 trillion banknote. The third redenomination produced the "fourth dollar" (ZWL) which was worth 1 trillion ZWR (third dollar), so overall the ratio of the redenominations was 103 × 1010 × 1012 = 1025.
Despite attempts to control inflation by legislation, and three separate redenomination
Redenomination
Redenomination is the process of changing the face value of banknotes or coins used in circulating currency.When redenomination occurs, financial data that spans the change must be correctly accounted for. For example, the GDP is properly documented....
s in 2006, 2008 and 2009, the use of the dollar as an official currency was effectively abandoned on 12 April 2009. This was a result of the Reserve Bank of Zimbabwe legalizing the use of foreign currencies for transactions in January 2009.
Currencies such as the South African rand
South African rand
The rand is the currency of South Africa. It takes its name from the Witwatersrand , the ridge upon which Johannesburg is built and where most of South Africa's gold deposits were found. The rand has the symbol "R" and is subdivided into 100 cents, symbol "c"...
, Botswana pula
Botswana pula
The pula is the currency of Botswana. It has the ISO 4217 code BWP and is subdivided into 100 thebe. Pula literally means "rain" in Setswana, because rain is very scarce in Botswana - home to much of the Kalahari Desert - and therefore valuable. Pula also means "blessing" as rain is considered a...
, pound sterling
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...
, euro
Euro
The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...
, and the United States dollar
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
are now used for all transactions in Zimbabwe; the policy of the government of Zimbabwe has insisted that any attempts to reintroduce Zimbabwean currency should be considered only if industrial output improves.
History
The Zimbabwean dollar's predecessor, the Rhodesian dollarRhodesian dollar
The dollar was the currency of Rhodesia between 1970 and 1980. It was subdivided into 100 cents.-History:The dollar was introduced on February 17, 1970, less than a month before the declaration of a republic on March 2, 1970. It replaced the pound at a rate of 2 dollars to 1 pound...
was essentially equal to half of a pound sterling
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...
when it was adopted during the decimalisation of 1970, the same practice which was used in other Commonwealth
Commonwealth of Nations
The Commonwealth of Nations, normally referred to as the Commonwealth and formerly known as the British Commonwealth, is an intergovernmental organisation of fifty-four independent member states...
countries such as South Africa
South Africa
The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...
, Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
, and New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
. The selection of the name was motivated by the fact that the reduced value of the new unit correlated more closely to the value of the US dollar than it did to the pound sterling
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...
.
Introduction of the first dollar
The first Zimbabwean dollar was introduced in 1980 and replaced the Rhodesian dollarRhodesian dollar
The dollar was the currency of Rhodesia between 1970 and 1980. It was subdivided into 100 cents.-History:The dollar was introduced on February 17, 1970, less than a month before the declaration of a republic on March 2, 1970. It replaced the pound at a rate of 2 dollars to 1 pound...
at par. The initial ISO 4217
ISO 4217
ISO 4217 is a standard published by the International Standards Organization, which delineates currency designators, country codes , and references to minor units in three tables:* Table A.1 – Current currency & funds code list...
code was ZWD. At the time of its introduction, the Zimbabwean dollar was worth more than the U.S. dollar, with ZWD 1 = USD 1.47 However, the currency's value eroded rapidly over the years. On 26 July 2006, the parallel market value of the Zimbabwean dollar fell to one hundred to the British pound
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...
.
| Date of redenomination | Currency code | Value |
|---|---|---|
| 1 Aug 2006 | ZWN | 1 000 ZWD |
| 1 Aug 2008 | ZWR | ZWN = ZWD |
| 2 Feb 2009 | ZWL | ZWR = ZWN = ZWD |
Introduction of the second dollar
In October 2005, the head of the Reserve Bank of ZimbabweReserve Bank of Zimbabwe
The Reserve Bank of Zimbabwe is the central bank of Zimbabwe.-History:The bank traces its history to the Bank of Rhodesia and Nyasaland, founded in March 1956, which in turn was the successor to the Central Currency Board....
, Dr. Gideon Gono
Gideon Gono
Gideon Gono is the current Governor of the Reserve Bank of Zimbabwe and former CEO of the Jewel Bank, formerly known as the Commercial Bank of Zimbabwe...
, announced that "Zimbabwe will have a new currency next year." New banknotes and coins were to replace the then current Zimbabwean dollar. Gono did not provide a name for this new currency. In June 2006, Deputy Finance Minister David Chapfika stated that Zimbabwe had to achieve macroeconomic stability (i.e., double digit inflation) before any new currency was introduced.
The dollar was redenominated on 1 August 2006 at the rate of 1 revalued dollar = 1000 old dollars. The new dollar was subdivided into 100 cents, although cents were not used in practice. Together with the redenomination, the government devalued the dollar by 60% against the US dollar (see exchange rate history table below), from 101,000 old dollars (101 revalued) to 250 revalued dollars. ISO originally assigned a new currency code of ZWN to this redenominated currency, but the Reserve Bank of Zimbabwe could not deal with a currency change. Therefore the currency code remained 'ZWD'. The revaluation campaign, which Gideon Gono named "Operation Sunrise" was completed on 21 August 2006. It was estimated that some ten trillion old Zimbabwe dollars (22% of the money supply
Money supply
In economics, the money supply or money stock, is the total amount of money available in an economy at a specific time. There are several ways to define "money," but standard measures usually include currency in circulation and demand deposits .Money supply data are recorded and published, usually...
) were not redeemed during this period.
On 12 December 2006, Gono hinted in a memorandum to banks and other financial institutions that he would lay out the next phase of his monetary reforms dubbed Project Sunrise Two when he announced the monetary policy review statement in January 2007. It was not possible to get immediate confirmation from Gono's office whether the memorandum was advice to banks that he would be launching the new currency in January. But the chief executive officer of one of the country's largest banks said industry players had understood the governor's memo to mean new money would be introduced next month. A possible name appeared to be "ivhu", which means "soil" in Shona
Shona language
Shona is a Bantu language, native to the Shona people of Zimbabwe and southern Zambia; the term is also used to identify peoples who speak one of the Shona language dialects: Zezuru, Karanga, Manyika, Ndau and Korekore...
.
The following year, on 2 February 2007, the RBZ revealed that a new (third) dollar would be released soon and gave some details of the new banknotes (see below). However, with inflation at the time still in the four digits, the banknotes remained in storage. During the same month, the Reserve Bank of Zimbabwe declared inflation illegal, outlawing any raise in prices on certain commodities between 1 March and 30 June 2007. Officials arrested executives of some Zimbabwean companies for increasing prices on their products. Economists generally suspect that such measures are ineffective at eliminating the problem in the long term.
Economist Eddie Cross reported on 15 June 2007 that "There is talk that the Reserve Bank will cut another three zeros off our currency next week and this would mean that one Zimbabwe dollar would now equal one million of the old dollars. Chaos reigns in commerce and industry and those in the public sector are frantic."
The Zimbabwe dollar was again devalued on 6 September 2007, this time by 92%, to give an official exchange rate of ZW$30,000 to US$1, although the black market exchange rate was estimated to be ZW$600,000 to US$1.
Meanwhile the WM/Reuters company introduced a notional exchange rate (ISO ZWN) which more accurately reflected black market exchange rates. Since there was a shortage of foreign exchange in the country the official rate was nearly impossible to obtain. The method of calculation was based on Purchasing Power Parity utilizing the dual listing of companies on the Harare (ZH) and London Stock exchanges (LN).
In particular, the Old Mutual Implied Rate (OMIR) was calculated by dividing the Zimbabwe Stock Exchange price of shares of the insurance company named "Old Mutual" by the London Stock Exchange Price for the same share.
Introduction of the third dollar
Redenomination
Redenomination is the process of changing the face value of banknotes or coins used in circulating currency.When redenomination occurs, financial data that spans the change must be correctly accounted for. For example, the GDP is properly documented....
. Effective August 1, 2008, ZW$10 billion would be worth ZW$1; the new currency code was ZWR. The planned denominations to be issued are coins valued Z$5, Z$10 and Z$25 and banknotes worth Z$5, Z$10, Z$20, Z$100 and Z$500. While the German firm of Giesecke & Devrient
Giesecke & Devrient
Giesecke & Devrient is a German company headquartered in Munich that provides banknote and securities printing, smart cards, and cash handling systems....
was no longer printing Zimbabwean currency, The Daily Telegraph
The Daily Telegraph
The Daily Telegraph is a daily morning broadsheet newspaper distributed throughout the United Kingdom and internationally. The newspaper was founded by Arthur B...
reported that the new currency was printed before the relationship was severed and had been kept in storage since then.
Due to frequent cash shortages and the worthless Zimbabwean dollar, foreign currency was effectively legalised as a de facto currency on 13 September 2008 via a special program to officially license a number of retailers to accept foreign money. This reflected the reality of the dollarization
Dollarization
Dollarization occurs when the inhabitants of a country use foreign currency in parallel to or instead of the domestic currency. The term is not only applied to usage of the United States dollar, but generally to the use of any foreign currency as the national currency.The biggest economies to have...
of the economy, with many shop keepers refusing to accept Zimbabwe dollars and requesting U.S. dollars or South African rand instead. Despite redenomination, the RBZ was forced to print banknotes of ever higher values to keep up with surging inflation, with ten zeros reappearing by the end of 2008 (see below).
Introduction of the fourth dollar
On February 2, 2009, the RBZ announced that a further 12 zeros were to be taken off the currency, with 1,000,000,000,000 (third) Zimbabwe dollars being exchanged for 1 new (fourth) dollar. New banknotes were introduced with a face value of Z$1, Z$5, Z$10, Z$20, Z$50, Z$100 and Z$500. The banknotes of the fourth dollar circulated alongside the third dollar, which had to remain legal tender until 30 June 2009. The new currency code was ZWL.The Zimbabwean dollar had become largely irrelevant, with the economy being almost completely dollarized
Dollarization
Dollarization occurs when the inhabitants of a country use foreign currency in parallel to or instead of the domestic currency. The term is not only applied to usage of the United States dollar, but generally to the use of any foreign currency as the national currency.The biggest economies to have...
. Even the national postal service, Zimpost, was said to be charging customers postage in US Dollars, even though some of the stamps were in Zimbabwean Dollar denomination.
Zimbabwe finance minister, Tendai Biti
Tendai Biti
Tendai Laxton Biti is a Zimbabwean politician. He is the Secretary-General of the Movement for Democratic Change political party and a member of Parliament for Harare East; currently he is the Minister of Finance of Zimbabwe.-Early life:Biti was born in Dzivarasekwa, Harare...
, said in his first budget report, "The death of the Zimbabwe dollar is a reality we have to live with. Since October 2008 our national currency has become moribund."
In late January 2009, acting Finance Minister Patrick Chinamasa
Patrick Chinamasa
Patrick Antony Chinamasa is a Zimbabwean politician, currently serving as the Minister of Justice.-Career:A leading member of the ruling ZANU-PF party, Chinamasa became first deputy Agriculture Minister, and then Attorney General of Zimbabwe; he also holds the role of Leader of the Zimbabwean...
announced that all Zimbabweans would be allowed to conduct business in any currency as a response to the hyperinflation crisis.
On April 12, 2009, media outlets reported that economic planning minister Elton Mangoma
Elton Mangoma
Elton Steers Mangoma is the Zimbabwe Minister of Economic Planning and Investment Promotion. He is the Member of House of Assembly for Makoni North .- Career :...
had announced the suspension of the local currency "for at least a year", effectively terminating the fourth dollar.
Inflation
Rampant inflationInflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
and the collapse of the economy severely devalued the currency, with many organizations using the United States dollar
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
, the euro
Euro
The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...
, the pound sterling
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...
, the South African rand
South African rand
The rand is the currency of South Africa. It takes its name from the Witwatersrand , the ridge upon which Johannesburg is built and where most of South Africa's gold deposits were found. The rand has the symbol "R" and is subdivided into 100 cents, symbol "c"...
, or the Botswana pula
Botswana pula
The pula is the currency of Botswana. It has the ISO 4217 code BWP and is subdivided into 100 thebe. Pula literally means "rain" in Setswana, because rain is very scarce in Botswana - home to much of the Kalahari Desert - and therefore valuable. Pula also means "blessing" as rain is considered a...
instead. Early in the 21st century, Zimbabwe started to experience hyperinflation
Hyperinflation
In economics, hyperinflation is inflation that is very high or out of control. While the real values of the specific economic items generally stay the same in terms of relatively stable foreign currencies, in hyperinflationary conditions the general price level within a specific economy increases...
. Inflation reached 623% in January 2004, then fell back to low triple digits in 2004 before surging to 1,281.1% in 2006.
Inflation reached another record high of 3714% (year-on-year) in April 2007. The monthly rate for April 2007 exceeded 100%, implying that inflation may soon exceed all forecasts, as 100% monthly inflation over sustained 12 months would produce annual inflation of over 400,000%. Mid-year inflation for 2007 has been breaching records as inflation for May 2007 was estimated at 4,530% (year-on-year).
On 21 June 2007, the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
ambassador to Zimbabwe, Christopher Dell
Christopher Dell
Christopher William Dell is a career United States Foreign Service officer who currently serves as the U.S. Ambassador to the Republic of Kosovo, after having been posted to Angola and Zimbabwe.-Education:...
, told The Guardian
The Guardian
The Guardian, formerly known as The Manchester Guardian , is a British national daily newspaper in the Berliner format...
newspaper that inflation could reach 1.5 million percent by the end of the year. The unofficial inflation rate at that time was above 11,000%, and the black-market exchange rate was Z$400,000 to the pound.
On 13 July 2007, the Zimbabwean government said it had temporarily stopped publishing (official) inflation figures, a move that observers said was meant to draw attention away from "runaway inflation which has come to symbolise the country's unprecedented economic meltdown."
On 27 July 2007, the Consumer Council of Zimbabwe (CCZ) said its recent calculations for the monthly expenditure for an urban family of six showed that inflation for the month of June was more than 13,000%. The Central Statistical Office (CSO), the official source of Consumer Price Index numbers, had not released its figures since February (2007) when it reported annual inflation at 1,729%.
In September 2007, the Central Statistical Office announced an official inflation rate of 6,592.8% for August 2007. Private estimates were as high as 20,000%. In October 2007, they announced an official inflation rate of 7,892.1% for September 2007. In November 2007, they announced an official inflation rate of 14,840.5% for October 2007.
Hyperinflation
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
stated that inflation was predicted to rise to 100,000% per annum.
On 14 February 2008, the Central Statistical Office announced that the inflation rate for December 2007 was 66,212.3%, and the unofficial exchange rate was Z$7.1 million to the US$1.
On 20 February 2008, the Central Statistical Office said that officially, inflation has in January 2008 gone past the 100,000% mark to 100,580.2%.
On 4 April 2008, the Financial Gazette (FinGaz) reported that officially, inflation in February 2008 jumped to 164,900.3%.
On 15 May 2008, the Zimbabwe Independent reported that officially, inflation in March 2008 jumped to 355,000%.
On 21 May 2008, SW Radio Africa reported that, according to an independent financial assessment inflation in May 2008 jumped to 1,063,572.6%. The state statistical service has said there are not enough goods in the shortage-stricken shops to calculate any new (official) figures.
On 26 June 2008, the Zimbabwe Independent reported that, latest figures from the Central Statistical Offices (CSO) showed that annual inflation rose by 7,336,000 percentage points to 9,030,000% by June 20 and was set to end the month at well above 10,500,000%.
The Sydney Morning Herald
The Sydney Morning Herald
The Sydney Morning Herald is a daily broadsheet newspaper published by Fairfax Media in Sydney, Australia. Founded in 1831 as the Sydney Herald, the SMH is the oldest continuously published newspaper in Australia. The newspaper is published six days a week. The newspaper's Sunday counterpart, The...
reported that inflation was likely to be 2 million percent in May 2008 and 10-15 million percent in June 2008, according to John Robertson, a respected Zimbabwean economist. Robertson estimated inflation in July 2008 to be 40-50 million percent. Inflation can only be estimated because of the impossibility of following the cost of individual goods.
According to Central Statistical Office statistics, annual inflation rate rose to 231 million percent in July 2008. The month-on-month rate rose to 2,600.2%. By December 2008, inflation was estimated at 6.5 quindecillion novemdecillion percent (65 followed by 107 zeros).
As predicted by the quantity theory of money
Quantity theory of money
In monetary economics, the quantity theory of money is the theory that money supply has a direct, proportional relationship with the price level....
, this hyperinflation has been caused primarily by the Reserve Bank of Zimbabwe's choice to mushroom the money supply.
Since February 2009, following a period of hyperinflation
Hyperinflation
In economics, hyperinflation is inflation that is very high or out of control. While the real values of the specific economic items generally stay the same in terms of relatively stable foreign currencies, in hyperinflationary conditions the general price level within a specific economy increases...
and widespread rejection of the devalued currency, companies and individuals are permitted to transact domestic business in other currencies, such as the US dollar
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
or the South African rand
South African rand
The rand is the currency of South Africa. It takes its name from the Witwatersrand , the ridge upon which Johannesburg is built and where most of South Africa's gold deposits were found. The rand has the symbol "R" and is subdivided into 100 cents, symbol "c"...
. In consequence, the Zimbabwean economy has undergone dollarization
Dollarization
Dollarization occurs when the inhabitants of a country use foreign currency in parallel to or instead of the domestic currency. The term is not only applied to usage of the United States dollar, but generally to the use of any foreign currency as the national currency.The biggest economies to have...
and the Zimbabwean dollar has fallen out of everyday use.
Money supply (2006–2008)
Reserve Bank of Zimbabwe
The Reserve Bank of Zimbabwe is the central bank of Zimbabwe.-History:The bank traces its history to the Bank of Rhodesia and Nyasaland, founded in March 1956, which in turn was the successor to the Central Currency Board....
, Gideon Gono, announced that the government had printed ZW$20.5 trillion in order to buy foreign currency to pay off IMF
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
arrears
Arrears
Arrears is a legal term for the part of a debt that is overdue after missing one or more required payments. The amount of the arrears is the amount accrued from the date on which the first missed payment was due...
. In early May 2006, Zimbabwe's government announced that they would produce another ZW$60 trillion. The additional currency was required to finance the recent 300% salary increase for soldiers and policemen and 200% increase for other civil servants. The money was not budgeted for the current fiscal year, and the government did not say where it would come from. On 29 May, Reserve Bank officials told IRIN that plans to print about ZW$60 trillion (about US$592.9 million at official rates) were briefly delayed after the government failed to secure foreign currency to buy ink and special paper for printing money.
In late August 2006, it was reported that about ZW$10 trillion old dollars (22% of the money supply) had not been exchanged for revalued dollars. These bearer cheques were demonetised.
On 27 June 2007, it was announced that central bank governor Gideon Gono
Gideon Gono
Gideon Gono is the current Governor of the Reserve Bank of Zimbabwe and former CEO of the Jewel Bank, formerly known as the Commercial Bank of Zimbabwe...
had been ordered by President Robert Mugabe
Robert Mugabe
Robert Gabriel Mugabe is the President of Zimbabwe. As one of the leaders of the liberation movement against white-minority rule, he was elected into power in 1980...
to print an additional ZWD$1 trillion to cater for civil servants' and soldiers' salaries that were hiked by 600% and 900% respectively.
On 28 July 2007, it was reported that Mugabe has said that Zimbabwe
Zimbabwe
Zimbabwe is a landlocked country located in the southern part of the African continent, between the Zambezi and Limpopo rivers. It is bordered by South Africa to the south, Botswana to the southwest, Zambia and a tip of Namibia to the northwest and Mozambique to the east. Zimbabwe has three...
will go on printing money if there is not enough for underfunded municipal projects.
On 30 August 2007, it was reported that an additional ZW$3 trillion had been printed to pay for 500,000 scotch carts and 800,000 ox-drawn ploughs plus an unspecified number of cattle.
On 3 September 2007, it was reported that the black market in Zimbabwe is once again booming despite price controls. People who previously were employed for US$11 (ZW$2 Million) a month are now able to turn as much as US$166 (ZW$30 Million) just through black market trading.
On 24 November 2007, it was reported that money supply was now $58 trillion revalued Zimbabwean dollars (ZWD) ($41 million US at parallel rates). However, Zimbabwe banks could only account for $1 to $2 trillion of those dollars, meaning that members of the public were holding $56 to $57 trillion in cash.
On 4 January 2008, it was reported that money supply had been increased by $33 trillion (to $100 trillion) revalued Zimbabwean dollars (ZWD) Further, the demonetization of the $200,000 bearer cheques was put on hold, thus increasing the money supply.
On 21 January 2008, it was reported, by Gideon Gono, that the money supply had been increased to ZW$170 trillion since the middle of December. Further, Gono expected it to reach $800 trillion by 28 January 2008.
On 1 March 2008, it was reported that documents obtained by The Sunday Times show the Munich company Giesecke & Devrient
Giesecke & Devrient
Giesecke & Devrient is a German company headquartered in Munich that provides banknote and securities printing, smart cards, and cash handling systems....
(G&D) was receiving more than €500,000 (£382,000) a week for delivering bank notes equivalent to $170 trillion a week.
According to a source at the Reserve Bank of Zimbabwe, G&D was delivering 432,000 sheets of banknotes every week to Fidelity printers in Harare, where they were stamped with the denomination. Each sheet contains 40 notes and the current production is entirely in Z$10M notes. On 1 July 2008, Giesecke & Devrient responded to pressure from the German government by suspending production of bank notes for Zimbabwe.
In the Guardian
The Guardian
The Guardian, formerly known as The Manchester Guardian , is a British national daily newspaper in the Berliner format...
, on 18 July 2008, a report on Zimbabwe's inflation, said that an egg costs ZW$50 billion (GBP 0.17, USD 0.32), and it showed adverts for prizes of Z$100 trillion in a Zimbabwean derby and ZW$1.2 quadrillion
Quadrillion
Quadrillion may mean either of the two numbers :* 1,000,000,000,000,000 – for all short scale countries; increasingly common meaning in English language usage* 1,000,000,000,000,000,000,000,000 – for all...
($1,200,000,000,000,000.00: approx. GBP 2,100; USD 4,200) in a lottery
Lottery
A lottery is a form of gambling which involves the drawing of lots for a prize.Lottery is outlawed by some governments, while others endorse it to the extent of organizing a national or state lottery. It is common to find some degree of regulation of lottery by governments...
. It also showed a monthly war pension currently is ZW$109 billion (GBP 0.37, USD 0.74), shops can only cash cheques if the customer writes double the amount, because the cost will go up by the time the cheque has cleared, and people can only withdraw a maximum of ZW$100 billion from cashpoints.
On 23 July 2008, an Austro
Austria
Austria , officially the Republic of Austria , is a landlocked country of roughly 8.4 million people in Central Europe. It is bordered by the Czech Republic and Germany to the north, Slovakia and Hungary to the east, Slovenia and Italy to the south, and Switzerland and Liechtenstein to the...
-Hungarian
Hungary
Hungary , officially the Republic of Hungary , is a landlocked country in Central Europe. It is situated in the Carpathian Basin and is bordered by Slovakia to the north, Ukraine and Romania to the east, Serbia and Croatia to the south, Slovenia to the southwest and Austria to the west. The...
company based in Vienna
Vienna
Vienna is the capital and largest city of the Republic of Austria and one of the nine states of Austria. Vienna is Austria's primary city, with a population of about 1.723 million , and is by far the largest city in Austria, as well as its cultural, economic, and political centre...
confirmed that it is providing the Reserve Bank of Zimbabwe with the licences and software required to design and print Zimbabwe currency. The company, named Jura JSP, said it would consider ending its supply of licences and software if the European Union required it to do so. Without the licences and software, the Reserve Bank of Zimbabwe may be unable to print notes in larger denominations than are already in circulation.
On 24 July 2008, the Reserve Bank of Zimbabwe announced that "appropriate measures are being put in place to address the current setbacks being faced on the currency front, as well as on financial and accounting systems." It promised that in "the next few days" it would institute changes to the minimum cash withdrawal limits and IT systems' constraints. Currently, the government limits cash withdrawals to ZW$100 billion per day, which is less than the cost of a loaf of bread. IT systems cannot handle such large numbers; the automated teller machine
Automated teller machine
An automated teller machine or automatic teller machine, also known as a Cashpoint , cash machine or sometimes a hole in the wall in British English, is a computerised telecommunications device that provides the clients of a financial institution with access to financial transactions in a public...
s for one major bank give a "data overflow error" and freeze customers attempt to withdraw money with so many zeros. That same day, the Institute of Commercial Management reported that ZW$1.2 trillion is worth the same as one British pound.
From January to December 2008, the money supply growth rose from 81,143% to 658 billion percent.
| Date | 2006 | 2007 | 2008 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| July | August | September | November | December | 21 January | 28 January | March | June | |
| Money supply | 4.5 ZWD | 4.5 ZWN | 3.5 ZWN | 5.8 or 6.7 ZWN |
1 ZWN | 1.7 ZWN | 8 ZWN | 2.5 ZWN | ≥ 9 ZWN |
Abandonment
The use of foreign currencies were legalised in January 2009, causing general consumer prices to stabilise again after years of hyperinflationHyperinflation
In economics, hyperinflation is inflation that is very high or out of control. While the real values of the specific economic items generally stay the same in terms of relatively stable foreign currencies, in hyperinflationary conditions the general price level within a specific economy increases...
and price speculation. The move led to a sharp drop in the usage of the Zimbabwean dollar, as hyperinflation rendered even the highest denominations worthless.
On 2 February 2009 the Zimbabwean dollar was redenominated once more, at the ratio of 1 000 000 000 000 (1012) ZWR to 1 ZWL. The third dollar was expected to be demonetised on 1 July 2009, but the complete abandonment of local currency was hastened by the decline in overall consumer usage of local currency in favour of other currencies, helped by the legalization of the use of hard currencies in January 2009.
The dollar was effectively abandoned as an official currency on 12 April 2009 when the Economic Planning Minister Elton Mangoma confirmed the suspension of the national currency for at least a year, but exchange rates with the Zimbabwean dollar were maintained for up to a year afterwards. The current government of Zimbabwe said that the Zimbabwean currency should only be reintroduced if the industrial output was 60% or more of its capacity, compared to the April 2009 average of 20%.
Coins
In 1980, coins were introduced in denominations of 1, 5, 10, 20, 50 cents and 1 dollar. The 1 cent coin was struck in bronze, with the others struck in cupro-nickel. In 1989, bronze-plated steel replaced bronze. A 2 dollar coin was introduced in 1997. In 2001, nickel-plated steel replaced cupro-nickel in the 10, 20 and 50 cents and 1 dollar, and a bimetallic 5 dollar coin was introduced.Plans by the Reserve Bank of Zimbabwe, for new Z$5,000 and Z$10,000 coins were announced in June 2005. However, the coins never appeared.
All old coins dating from the first dollar were reintroduced at face value to the third dollar in Aug 2008, effectively increasing their value 10 trillion-fold, and new $10 and $25 coins were introduced. These coins were minted in 2003 but only issued with the redenomination.
Banknotes, traveller's cheques, and bearer cheques
Reserve Bank of Zimbabwe
The Reserve Bank of Zimbabwe is the central bank of Zimbabwe.-History:The bank traces its history to the Bank of Rhodesia and Nyasaland, founded in March 1956, which in turn was the successor to the Central Currency Board....
from 1980 to 2009. Up to 2003 regular banknotes were issued but as hyperinflation
Hyperinflation
In economics, hyperinflation is inflation that is very high or out of control. While the real values of the specific economic items generally stay the same in terms of relatively stable foreign currencies, in hyperinflationary conditions the general price level within a specific economy increases...
developed from 2003, the Reserve Bank issued short-lived emergency travellers cheques, which were then quickly superseded by time-limited Bearer Cheques, in denominations ranging from $5 000 to $20 000 in 2003, then up to $100 000 dollars by early-2006.
On 1 August 2006, new Bearer cheques with thirteen denominations ranging from 1¢ to $100 000 were issued following the first redenomination of the dollar, superseding the regular banknotes by 21 August 2006 and until August 2008. Bearer cheques of 5,000 dollars (dated 1 February 2007) and 50,000 (dated 1 March 2007) were issued in March 2007, followed by cheques of 200,000 (dated 1 August 2007) in August 2007. Subsequently, Gideon Gono
Gideon Gono
Gideon Gono is the current Governor of the Reserve Bank of Zimbabwe and former CEO of the Jewel Bank, formerly known as the Commercial Bank of Zimbabwe...
of the RBZ announced on 19 December 2007 that new bearer cheques (Z$250,000; Z$500,000; and Z$750,000) had been produced and would be released on 20 December. Additionally, the current high value bearer cheques (Z$200,000) would be demonetised as of 1 January 2008. However, due to ongoing problems, plans to demonetise this note were put on hold at the end of December.
Since the Zimbabwean dollar was revalued in August 2006, there were repeated discussions and proposals regarding a further revaluation. As early as the beginning of 2007 it appeared that a revaluation was planned with new banknote designs being commissioned. New plans were announced in October 2007 They were initially postponed until 2008 before, in November 2007, the revaluation was described as "imminent" and would remove as many as four zeros from the currency and would be called Sunrise 2. However, on 18 December 2007, it was reported that a further printing of the current Z$200,000 bearer cheques had been produced, seemingly instead of revaluing. Further new issues of bearer cheques have since taken place.
At a press conference on 16 January 2008, reserve bank Governor Gono stated that "With effect from Friday (January 18), the Reserve Bank of Zimbabwe is releasing the following bearer cheques into circulation: one million dollars (officially worth about US$33/22 euros but worth about 50c at the parallel rate), five million dollars and 10 million dollars." He continued, "...daily cash withdrawals have been increased from the current Z$50 million to Z$500 million per individual." Less than a month after announcing a similar move, Gono said the new notes would provide much needed relief to consumers who often have to go shopping with sacks of cash.
The Zim Independent and Zim Online reported on 4 April 2008 that 25 and 50 million dollar bearer cheques were issued on 4 April. The RBZ also increased the maximum withdrawal limit for individuals to $5 billion a day. On 6 May, 100 million dollar and 250 million dollar bearer cheques were issued and the official exchange rate was floated to counter black market speculation. 10 days later, the RBZ announced that 500 million dollar bearer cheques and special agro cheques in the amounts of 5, 25, and 50 billion dollars would be issued were to be issued on 20 May.
On 14 July 2008 Giesecke & Devrient
Giesecke & Devrient
Giesecke & Devrient is a German company headquartered in Munich that provides banknote and securities printing, smart cards, and cash handling systems....
ceased supplying bank note paper to Fidelity Printers & Refiners, the Zimbabwean government-owned company that printed Zimbabwean currency. Virtually incessant use of the currency-printing presses have caused many of the machines to break down, and repair parts are no longer being shipped to Zimbabwe to repair the machines. The Reserve Bank issued the $100 billion Agro Cheque on 21 July, which were printed prior to the suspension.
On 30 July 2008 the RBZ announced a new currency, effective 1 August 2008, removing 10 zeros from the monetary value, by "a factor of 1 to 10". Banknotes in the denominations of $1, $5, $10, $20, $100 and $500 were introduced and replaced bearer cheques and agro cheques by 31 December 2008. However, the familiar cycle of printing ever higher denomination notes to keep up with inflation continued despite redenomination
Redenomination
Redenomination is the process of changing the face value of banknotes or coins used in circulating currency.When redenomination occurs, financial data that spans the change must be correctly accounted for. For example, the GDP is properly documented....
. A $1,000 banknote was introduced by the RBZ on 19 September 2008, and ten days later, as the unofficial exchange rate surpassed 270,000 ZWD to the US dollar, it issued new notes in the denominations of $10,000 and $20,000. A $50,000 banknote was released on 13 October 2008, followed by $100,000, $500,000, and $1,000,000 denominations announced on 3 November. The daily cash withdrawal limit was raised for individuals to Z$500,000 from Z$50,000 and for select companies it went up to $1 million. Banknotes valued at $10 million, $50 million and $100 million were issued as the withdrawal limit was increased to $100 million per week on 4 December 2008. Scarcely four days later, on 8 December, the RBZ issued a $200 million banknote, and introduced a $500 million note on 12 December, worth approximately US$8 at the time. In little over half a year, the billion denomination returned, with the RBZ issuing banknotes of $1 billion, $5 billion, and $10 billion on 19 December.
Amid the continuing hyperinflation that rendered the currency virtually worthless, spurring the increasing dollarization
Dollarization
Dollarization occurs when the inhabitants of a country use foreign currency in parallel to or instead of the domestic currency. The term is not only applied to usage of the United States dollar, but generally to the use of any foreign currency as the national currency.The biggest economies to have...
of the economy, the RBZ issued another set of new notes in denominations of $20 billion and $50 billion to be released 12 January. Stepping up another order of magnitude, the Reserve Bank introduced trillion-denominated notes for the first time, unveiling banknotes valued at $10 trillion, $20 trillion, $50 trillion, and $100 trillion on 16 January, which were supposed to help citizens still in formal employment to withdraw a full month's worth of salary by showing a corresponding payslip. As even these notes became increasingly worthless, a media campaign was launched in South Africa using the notes as printing paper
The Trillion Dollar Campaign
The Trillion Dollar Campaign is an outdoor advertising campaign launched in 2009 to promote the newspaper The Zimbabwean in South Africa...
.
On 2 February 2009 the dollar was revalued
Redenomination
Redenomination is the process of changing the face value of banknotes or coins used in circulating currency.When redenomination occurs, financial data that spans the change must be correctly accounted for. For example, the GDP is properly documented....
once more, this time in the ratio of 1:1012, and new banknotes of the fourth dollar, with seven denominations from $1 to $500, were issued. These banknotes circulated alongside the third dollar until the abandonment of the dollar on 12 April 2009.
Exchange rate history
This table shows a condensed history of the foreign exchange rate of the Zimbabwean Dollars to one US Dollar:| First dollar | Second dollar | Third dollar | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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EWLINE
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EWLINE
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EWLINE
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EWLINE
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† Due to the December 2007 banknote shortage, funds transferred via Electronic Funds Transfer Systems (EFTS) bore a premium rate of about $4 million, while the cash transaction rate varied around $2 million.
‡ Exchange rate was 20,000,000 for large amounts.
The third dollar rates above are OMIR. The cash rate differs significantly to the above rates. The table below is the cash rate of the third dollar history:
| Month | ZWR per USD |
|---|---|
| Sept 2008 | 1 000 |
| Oct 2008 | 90 000 |
| Nov 2008 | 1 200 000 |
| Mid Dec 2008 | 60 000 000 |
| End Dec 2008 | 2 000 000 000 |
| Mid Jan 2009 | 1 000 000 000 000 |
| 2 Feb 2009 | 300 000 000 000 000 |
Devaluation of the first dollar
The first dollar devalued from 0.6788 R$ to 1 US$ in 1978 to roughly half a million per US$ in 2006, when the currency is revalued.This table shows in more detail the historical value of one U.S. dollar in Zimbabwean dollars:
| Exchange rates of the first dollar (ZWD) | |||
|---|---|---|---|
| Date | Official Rate | Parallel Rate | Notes |
| 1978 | R$0.6788 (Apr) | n/a | R$ pegged to US$ |
| 1980 | R$0.68 (Mar) | n/a | R$ tied to basket of FRF, DEM, ZAR, CHF, GBP, USD |
| April 18, 1980 - Independence (1 Z$ = 1 R$) | |||
| 1982 | 0.8925 to 0.9140 (Dec) | - | ZWD devalued by 16.5% |
| 1983 | 0.96135 (Jan) | up to 3.18 (July) | ZWD devalued by 5% Parallel rate highly variable — premium up to 231% |
| 1983 (Aug) to 1993 (Dec) | 0.96135 - 6.82 | Flexible basket; dual rates; 20% tax on outgoing payments | |
| 1994 | 6.82 (Jan) | 8.36 (Oct) | Floating official rate (July 1) ; dual rates; ZWD devalued by 17% |
| 1995 | 8.26 (Jan) | 8.85 (Oct) | floating official rate; dual rates; rates unified 1998 (Dec) |
| 1996 | 9.13 (Jan) | 10.52 (Oct) | |
| 1997 | 10.50 (Jan) | 12.00 (Jan); 25.00 (Nov) | |
| 1998 | 18.00 (Jan) | 16.65 (Jun); 19.00 (Jul); 23.50 | |
| 1999 | 36.23 (Jan) | 38.30 (Sep) | On March 31, 1999, the Official Exchange Rate was pegged at ZWD 38 per USD; the parallel market had re-emerged by December 1999. |
| 2000 | 38 to 55 | 56 to 62 (Jul); 65 to 70 (Aug.) | In August 2000, the Official Exchange Rate was pegged at ZWD 50 , then ZWD 51 and finally at ZWD 55 per USD; parallel black market rates were at a large premium; in November, foreign exchange bureaus were closed. |
| 2001 | 55 | 70 (Jan); 80 (Feb); 100 (Mar); 120 (Apr); 140 (May); 160 (Jun); 250 (Jul); 300 (Aug); 400 (Sep); 300 (Oct); 320 (Nov); 340 (Dec) | In June, the official rate became a crawling peg rate. |
| 2002 | 55 | 380 (Jan) to 710 (Jun), 1400 (Jul) to 1740 (Oct) to 1400 (Dec) | In 2002 the parallel black market for foreign exchange mushroomed. |
| 2003 | 55 (Jan); 824 (Feb) | 1400 (Jan); 1450 (Feb); 2300 (May); 3000 (Jul); 6000 (Aug); 6400 (Oct); 6000 (Nov) | In February 2003, the Official Exchange Rate was re-pegged at ZWD 824 per US $ |
| 2004 | 824 (Jan 1); 4196 (Jan 12) to 5730 (Dec) | 5500 (Jan 1) to 6000 (Dec) | In January 2004, semiweekly (RBZ-controlled) currency auctions were set up to determine the official rate. |
| 2005 | 5,730 (January); 6,200 (March); 9,000 (May); 10,800 (July 18); 17,600 (July 25); 24,500 (August 25); 26,003 (September); 26,003 (October); 60,000 (Nov); 84,588 (Dec 30) | 6,400 (January); 14,000 (March); 20,000 (May); 25,000 (July 18); 45,000 (July 25); 45,000 (August 25); 75,000 (September); 80,000 to 100,000 (October); 90,000 (Nov); 96,000 (Dec 30) | August 24: Zimbabwean dollar becomes least valued currency unit Least valued currency unit The least valued currency unit is the currency in which a single unit buys the least number of any given other currency or the smallest amount of a given good. Most commonly, the calculation is made against a major reserve currency such as the United States dollar or the euro... |
| In November 2005, the regular currency auctions were discontinued and the RBZ announced that "market factors" would control the exchange rate. | |||
| 2006 (to July 31) | 85,158 (Jan 3); 99,201.58 (Jan 24); 101,195.54 (Apr 28) | 100,000 (Jan 6); 106,050 (Jan 19); 115,000 (Jan 20); 125,000 to 150,000 (Jan 25); 175,000 to 190,000 (Feb 24); 205,000 to 220,000 (Mar 03); 220,000 to 230,000 (April 13); 300,000 to 310,000 (May 25); 315,000 (June 9); 340,000 to 350,000 (June 16); 400,000 (June 21); 450,000 (July 1); 520,000 (July 9); 550,000 (July 27) | Economists predict an unofficial rate of nearly ZWD 250,000 to the US dollar by mid-2006. |
| Jan 24 - RBZ caps daily variance of official exchange rate based on volume traded. The ZWD is able to fluctuate (from its average rate) in a daily band of: 0% (under USD 5 million); 1% (USD 5 to 10 million); 1.5% (USD 10 to 15 million); or 2% (exceeds USD 15 million). This effectively froze the official exchange rate. | |||
Devaluation of the second dollar
The second dollar started off on August 1, 2006 with an official rate of 250 and a parallel rate of 550 to the US$. In July 2008 the dollar was revalued again, this time 10,000,000,000 2nd dollars became 1 3rd dollar, after the parallel rate reached 500 billion to 1 US$.More detailed data can be found in the table below :
| Exchange rates of the second dollar (ZWN) | ||||
|---|---|---|---|---|
| Date | | Official Rate (Revalued dollar) | Parallel Rate (Revalued dollar) | Notes | |
| 2006 | August | 250 (250,000 old) | 550 (Aug 01); 650 (Aug 03); 650 to 700 (Aug 24) | August 1: RBZ revalues the Zim dollar. 1,000 Old Zim dollars become 1 revalued Zim dollar. The official exchange rate is set to 250 revalued Zim dollars per 1 US dollar. (Parallel rate soars to over 600 revalued dollars per 1 US dollar) |
| September | 700 to 800 (Sep 08 - high volume transactions); 850 (Sep 14); 1,200 to 1,300(Sep 28) or 1,500 (Sep 29 - high volume transactions) |
|||
| October | 1,500 (Oct 12); |
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| November | 1,700 (Nov 6); 2,000 (Nov 19); 2,400 (Nov 29); |
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| December | 3,000 (Dec. 25) |
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| 2007 | January | 250 | 3,200 (11th); 3,500 (18th); 4,000 (20th); 4,200 (23rd); 6,000 (26th) |
|
| February | 4,800 (2nd); 5,000 (12th); 6,600 (23rd); 7,000 (27th) |
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| March | 7,500 (1st) 8,000 (2nd); 10,000 (8th); 11,000 (11th); 12,000 - 17,500 (16th); 16,000 (19th); 20,000 (21st); 24,000 (22nd); 25,000 (27th); 26,000 (29th) |
Zimbabwean dollar becomes least valued currency unit Least valued currency unit The least valued currency unit is the currency in which a single unit buys the least number of any given other currency or the smallest amount of a given good. Most commonly, the calculation is made against a major reserve currency such as the United States dollar or the euro... around March 21; In March, the parallel rate becomes extremely erratic, with reported rates varying significantly. |
||
| April | 250 (15,000 special rate) |
30,000 (1st); 15,000 (7th); 20,000 (8th); 25,000 (11th); 35,000 (15th) |
A "special rate" of 15,000 ZWD per USD was brought in on 26 April 2007. The improved exchange rate will be applied to miners, farmers, tour operators, non-governmental organizations, embassies, Zimbabweans living abroad that repatriate earnings, and others who generate foreign exchange. Exporters will be required to exchange money at the central bank to receive the better rate. | |
| May | 28,000 (10th); 32,000 (18th); 38,000 (20th); 40,000 (22nd); 45,000 (24th); 50,000 (29th) |
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| June | 55,000 (3rd); 60,000 (12th); 75-100,000 (13th); 120,000 (16th); 205,000 (20th); 300,000 (22nd); 400,000 (23rd) |
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| July | 270,000 (5th); 300,000 (14th) |
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| August | 200,000 (21st) |
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| September | 30,000 | 250,000 (7th); 280,000 (14th); 340,000 (18th); 500,000 (26th); 600,000 (29th) |
Official exchange rate was changed to 30,000 on September 7, 2007 | |
| October | 750,000 (17th); 1,000,000 (19th) |
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| November | 1,200,000 (1st); 4,500,000 (14th) (not confirmed); 1,400,000 (24th); 1,500,000 (30th) |
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| December | 1,800,000 (1st); 4,000,000 (3rd) |
Due to the Dec 2007, banknote shortage, funds transferred via Electronic Funds Transfer Systems (EFTS) bore a premium rate of about $4 million, while the cash transaction rate varied around $2 million. | ||
| 2008 | January | 1,900,000 (3rd); 2,000,000 (4th); 3,000,000 (8th); 4,500,000 (19th); 5,000,000 (21st); 6,000,000 (24th) |
The Old Mutual Implied Rate (OMIR) is calculated by dividing the Zimbabwe Stock Exchange price of the Old Mutual share by the London Stock Exchange Price for the same share. The answer is the Old Mutual Implied Rate for the Pound. Then a cross rate calculation is done for the USD rate. 6,240,837.51 (OMIR for 21st) 5,787,585.19 (OMIR for 25th) http://www.bulls.co.zw/Research/25-Jan-2008.pdf |
|
| February | 7,500,000 (13th); 8,500,000 (18th); 16,000,000 and 20,000,000 for large amounts (21st) |
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| March | 24,000,000 (2nd ); 25,000,000 (5th); 46,000,000 (10th); 70,000,000 (19th) |
69,226,148.58 (OMIR for 17th) |
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| April | 80,000,000 (17th); 85,000,000 (24th); 100,000,000 (26th) |
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| May | 30,000 (to May 4); 168,815,333.33 (May 5); 187,073,022.88 (May 6); 190,429,449.18 (May 7); 204,565,727.39 (May 8); 210,389,632.00 (May 9); 216,528,794.21 (May 12); 224,832,332.83 (May 13); 236,706,849.48 (May 14); 246,433,371.43 (May 15); 255,771,415.67 (May 16); 275,335,294.12 (May 19); 303,753,731.48 (May 20); 337,341,911.76 (May 21); 369,632,426.29 (May 22); 405,870,411.18 (May 23); 434,449,294.12 (May 27); 486,485,294.12 (May 28); 529,336,764.71 (May 29); 580,678,132.35 (May 30) http://www.rbz.co.zw/fca/fca.asp |
190,000,000 (1st); 200,000,000 (6th); 250,000,000 (13th); 315,000,000 (16th); 498,000,000 (22nd); 494,000,000 (23rd); 580,000,000 (28th); 703,000,000 (29th); 777,500,000 (30th) http://www.siyabonga-tatenda.com/zimmoney.html |
The official exchange rate was allowed to float May 6 | |
| June | 647,863,191.18 (2nd); 718,489,852.94 (3rd); 843,884,558.82 (4th); 969,647,058.82 (5th); 1,105,887,222.22 (6th); 1,365,130,333.33 (9th); 1,679,946,944.44 (10th); 2,150,078,888.89 (11th); 2,904,111,111.11 (12th); 3,524,549,987.29 (13th); 4,276,736,111.11 (16th); 4,952,500,000.00 (17th); 5,817,192,485.76 (18th); 6,718,055,555.56 (19th); 7,437,184,423.78 (20th); 8,260,031,632.83 (23rd); 9,005,149,886.88 (24th); 9,801,839,921.51 (25th); 10,594,701,303.45 (26th); 11,378,472,550.24 (30th) http://www.rbz.co.zw/fca/fca.asp |
971,500,000 (1st); 1,123,000,000 (3rd); 1,221,500,000 (4th); 1,964,500,000 (5th); 2,159,000,000 (6th); 2,691,588,425 (7th); 3,139,382,641 (9th); 4,605,736,200 (10th); 5,090,337,736 (11th); 5,137,128,498 (12th); 6,412,613,315 (13th); 7,512,863,828 (16th); 9,288,500,000 (17th); 13,999,000,000 (18th); 17,743,015,150 (19th); 20,269,600,000 (21st); 22,952,543,340 (23rd); 22,835,153,651 (24th); 32,603,770,511 (26th); 40,928,000,000 (30th) |
967,480,942 (OMIR for 2nd); 1,746,899,809 (OMIR for 3rd); 3,047,030,834 (OMIR for 4th); http://www.zimbabwesituation.com/jun6b_2008.html#Z12 16,044,776,323 (OMIR for 19th); 17,039,490,724 (OMIR for 20th); 34,910,587,875 (OMIR for 23rd); 78,479,941,887 (OMIR for 24th); 62,024,868,786 (OMIR for 25th); 64,575,990,281 (OMIR for 26th); 164,312,344,622 (OMIR for 30th) http://zimbabweanequities.com/#c1 |
|
| July | 12,226,034,516.65 (1st); 13,350,764,705.88 (2nd); 14,345,060,331.82 (3rd); 15,183,703,996.98 (4th); 16,204,996,229.26 (7th); 17,066,529,677.98 (8th); 17,883,023,378.58 (9th); 18,681,527,512.36 (10th); 19,489,294,117.65 (11th); 20,170,317,159.13 (14th); 21,460,313,914.03 (15th); 23,356,231,572.65 (16th); 25,389,017,580.37 (17th); 27,164,677,690.87 (18th); 30,201,803,133.32 (21st); 34,749,797,812.59 (22nd); 39,129,724,504.88 (23rd); 43,319,583,395.92 (24th); 48,679,445,871.90 (25th); 54,036,639,077.74 (28th); 58,886,562,526.04 (29th); 63,761,761,010.94 (30th); 69,484,070,056.18 (31st); (Source) |
53,049,500,000 (1st); 65,797,000,000 (7th); 102,351,000,000 (8th); 145,624,500,000 (11th); 151,425,393,163 (11th); http://www.swradioafrica.com/ 193,014,500,000 (14th); 200,414,514,369 (14th); http://www.swradioafrica.com/ 274,200,889,709 (15th); 288,072,000,000 (16th); 325,110,110,211 (16th); http://www.swradioafrica.com/ 324,446,338,775 (17th); 360,000,000,000 (17th); http://www.swradioafrica.com/ 380,000,000,000 (18th); 430,000,000,000 (18th); http://www.swradioafrica.com/ 600,000,000,000 (21st); , http://www.swradioafrica.com/ 650,000,000,000 (22nd) http://www.swradioafrica.com/ 750,000,000,000 (23rd); 555,000,000,000 (25th): http://www.swradioafrica.com 758,530,000,000 (30th); 510,000,000,000 (31st): http://www.swradioafrica.com |
142,024,433,315 (OMIR for 1st); 129,140,850,245 (OMIR for 2nd); 109,689,985,935 (OMIR for 3rd); 113,028,111,843 (OMIR for 4th); 202,409,619,045 (OMIR for 7th); 173,176,356,278 (OMIR for 8th); 126,117,317,180 (OMIR for 9th); 139,534,966,792 (OMIR for 10th); 189,961,549,747 (OMIR for 11th); 194,840,848,150 (OMIR for 14th); 236,850,692,832 (OMIR for 15th); 241,421,049,361 (OMIR for 16th); 270,477,236,528 (OMIR for 17th); 404,332,849,598 (OMIR for 18th); 502,683,475,196 (OMIR for 21st); 687,860,375,011 (OMIR for 22nd); 495,932,559,520 (OMIR for 23rd); 488,452,876,313 (OMIR for 24th); 619,334,351,928 (OMIR for 25th); 525,086,664,547 (OMIR for 28th); 456,921,446,064 (OMIR for 30th); 669,809,343,407 (OMIR for 31st); (Source http://www.zimbabweanequities.com/#c1) |
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Restoration of market data feeds
In the final months before Zimbabwe's central bank reforms of April 30, 2008, virtually all popular currency conversion resources relied upon the official rate of 30,000 ZWD to 1 USD for published figures, in spite of the vast differences between that and free market rates. By May 23, 2008, BloombergBloomberg L.P.
Bloomberg L.P. is an American privately held financial software, media, and data company. Bloomberg makes up one third of the $16 billion global financial data market with estimated revenue of $6.9 billion. Bloomberg L.P...
and Oanda began publishing floating rates based on Zimbabwe's formally regulated domestic bank market, while Yahoo Finance started using the updated official rate in July, albeit with a decimal point shift of 6 places. Those reported rates generally reflected the Official Rate as shown in the above table. They soon began to differ, in overvaluation of the Zimbabwean dollar, increasingly substantially in comparison to less regulated markets such as offshore markets or paper cash freely traded on the streets of Harare, reflected above as Parallel Rates.
Devaluation of the third dollar
On August 1, 2008, ten zeroes were removed from the currency, reducing 10 billion Zimbabwean dollars to one dollar. On 3 October 2008, the Reserve Bank of ZimbabweReserve Bank of Zimbabwe
The Reserve Bank of Zimbabwe is the central bank of Zimbabwe.-History:The bank traces its history to the Bank of Rhodesia and Nyasaland, founded in March 1956, which in turn was the successor to the Central Currency Board....
suspended temporarily the Real Time Gross Settlement
Real Time Gross Settlement
Real time gross settlement systems are funds transfer systems where transfer of money or securities takes place from one bank to another on a "real time" and on "gross" basis. Settlement in "real time" means payment transaction is not subjected to any waiting period. The transactions are settled...
(RTGS) system, halting electronic parallel market transfers, but it was reinstated on November 13, 2008.
After being introduced on August 1, 2008, the third dollar continued to devalue.
An overview of the exchange rate data can be found in the table below :
| Exchange rates of the third dollar (ZWR) | |||||
|---|---|---|---|---|---|
| Date | | Official Rate (Source: ) |
Parallel Rate (Sources: † / ‡ http://www.swradioafrica.com/) |
Old Mutual Implied Rate (OMIR Source: http://www.zimbabweanequities.com/#c1) |
Notes | |
| 2008 | August | 7.58 (1st) 8.11 (4th) 8.94 (5th) 9.92 (6th) 10.93 (7th) 11.90 (8th) 13.19 (13th) 14.52 (14th) 15.80 (15th) 17.49 (18th) 18.84 (19th) 20.08 (20th) 21.55 (21st) 23.29 (22nd) 25.34 (25th) 27.66 (26th) 29.91 (27th) 32.05 (28th) 34.83 (29th) |
40.53 †; 51 ‡ (1st); 61 ‡ (2nd) 40.96 †; 66 ‡ (5th) 74 ‡ (8th) 41.79 † (11th) 110 ‡ (13th) 190 ‡; 64.12 † (14th) 230 ‡ (15th) 223.51 †; 375 ‡ (18th) 420 ‡ (19th) 430 ‡ (21st) 460 †; 440 ‡ (26th) 650 ‡; 700 † (27th) 1,400 †; 1,700 ‡ (29th) |
49.23 (1st) 38.35 (4th) 34.05 (5th) 39.41 (6th) 64.19 (7th) 48.13 (8th) 74.86 (13th) 138.46 (14th) 121.43 (15th) 168.84 (18th) 161.24 (19th) 185.33 (20th) 297.21 (21st) 393.30 (22nd) 992.02 (25th) 749.47 (26th) 868.71 (27th) 1,330.10 (28th) 1,780.04 (29th) |
August 1: The Reserve Bank revalued the dollar again: 10 billion ZWN (or 10 trillion ZWD) becomes 1 ZWR. See also: "Zimbabwe’s re-valued currency after one month" includes a daily list of the ZWD parallel exchange rates in August 2008. |
| September | 37.15 (1st) 39.59 (2nd) 42.72 (3rd) 45.53 (4th) 48.79 (5th) 52.71 (8th) 58.10 (9th) 62.47 (10th) 67.52 (11th) 71.40 (12th) 77.69 (15th) 83.57 (16th) 88.70 (17th) 92.97 (18th) 96.43 (19th) 101.57 (22nd) 105.43 (23rd) 109.48 (24th) 114.61 (25th) 118.76 (26th) 125.75 (29th) 132.25 (30th) |
2,000 †; 2,498 ‡ (1st); 2,800 †; 3,650 ‡ (2nd) 4,300 † (3rd) 4,500 † (4th) 4,800 † 5,700 ‡; 7,500 (5th) 8,500 ‡ (8th) 14,000 † (9th) 20,000 †; 29,000 ‡ (11th) 30,000 (12th) 34,000 † (15th) 22,000 †; 34,000 ‡ (16th) 33,000 † (18th) 65,059 †; 59,652 ‡ (22nd) 80,754 ‡ (23rd) 140,251 †; 135,368 ‡ (24th) 271,915 ‡ (25th) 271,593 † (26th) 554,915 †; 360,707 ‡ (29th) Cash: 1,000 (25th) |
3,362 (1st) 3,949 (2nd) 4,311 (3rd) 5,085 (4th) 11,815 (5th) 13,583 (8th) 11,608 (9th) 14,936 (10th) 25,384 (11th) 19,788 (12th) 18,888 (15th) 11,633 (16th) 22,837 (17th) 34,606 (18th) 37,997 (19th) 79,816 (22nd) 131,237 (23rd) 270,794 (24th) 247,618 (25th) 266,075 (26th) 557,362 (29th) 592,416 (30th) |
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| October | 138.14 (1st) 145.62 (2nd) 153.10 (3rd) 160.46 (6th) 167.68 (7th) 176.33 (8th) 183.19 (9th) 198.93 (13th) 208.65 (14th) 217.72 (15th) 229.90 (16th) 244.05 (17th) 266.40 (20th) 290.92 (21st) 316.56 (22nd) 345.18 (23rd) 507.24 (28th) 558.53 (29th) 619.52 (30th) |
790,510 ‡; 1,000,000 (1st) 4,000 (cash) (3rd) 11,000 (cash) (11th) 50,000,000 (16th) 100,000,000 (20th) 20,000 (cash) (20th) Cash: 50,000 (24th) 11,939,980,000 ‡; 25,137 (cash) ‡ (25th) 69,127 (cash) ‡ (27th) 90,000 (cash) (29th) |
1,418,021 (1st) 841,881 (2nd) 660,732 (3rd) 1,715,118 (6th) 2,305,440 (7th) 2,045,021 (8th) 3,161,381 (9th) 4,183,564 (10th) 7,667,426 (13th) 10,706,802 (14th) 20,129,927 (15th) 66,418,944 (16th) 121,013,052 (17th) 333,500,825 (20th) 1,220,071,643 (21st) 3,178,696,865 (22nd) 26,867,910,902 (23rd) 98,339,944,470 (24th) 101,338,478,626 (27th am) 70,547,871,952 (27th pm) 233,621,089,202 (28th am) 250,783,986,568 (28th pm) 509,148,077,013 (29th am) 916,918,295,246 (29th pm) 2,443,676,912,678 (30th am) 3,949,870,500,674 (30th pm) 6,674,757,281,553 (31st am) 11,851,630,480,952 (31st pm) |
Electronic bank transfers (RTGS) were suspended by the Reserve Bank on the 3rd. No funds can be transferred between banks, effectively aborting the parallel rates. |
|
| November | 769.68 (3rd) 851.74 (4th) 922.96 (5th) 1,024.63 (6th) 2,850.37 (7th) 4,651.33 (10th) 6,626.39 (11th) 8,399.31 (12th) 10,788.70 (13th) 13,469.56 (14th) 17,398.16 (17th) 25,593.66 (18th) 30,320.43 (19th) 34,912.83 (20th) 38,128.72 (21st) 44,182.50 (24th) 49,237.71 (25th) 56,197.60 (26th) 62,761.43 (27th) 70,197.01 (28th) |
100,000 (cash) (5th) 30,000,000,000,000 ‡; 200,000 (cash) ‡ (7th) 28,400,000,000,000,000 ‡ (12th) 400,000 (cash) (12th) 650,000 (cash) ‡ (14th) 1,200,000 (cash) ‡ (24th) |
12,405,270,255,015 (3rd am) 35,179,473,949,600 (3rd pm) 118,066,516,958,323 (4th am) 216,162,327,532,185 (4th pm) 267,539,344,335,978 (5th am) 225,497,447,368,896 (5th pm) 193,012,615,772,476 (6th am) 134,838,399,549,100 (6th pm) 182,325,758,081,729 (7th am) 663,325,716,143,026 (7th pm) 1,680,757,577,947,650 (10th am) 22,410,101,039,302,100 (10th pm) 44,754,638,846,288,100 (11th am) 27,157,406,063,618,700 (11th pm) 18,237,844,841,170,300 (12th am) 12,981,054,269,303,500 (12th pm) 19,148,534,621,367,600 (13th am) 41,974,524,821,395,400 (13th pm) 62,136,238,923,283,400 (14th am) 183,025,618,461,867,000 (14th pm) 251,649,721,203,565,000 (17th am) 642,371,437,695,221,000 (17th pm) 661,229,327,046,568,000 (18th am) 447,591,739,042,251,000 (18th pm) 439,481,070,796,885,000 (19th) 12,617,983,349,233,500 (20th) |
The Reserve Bank lifted the suspension on the Real Time Gross Settlement System (RTGS) on 13 November As of 26 November newspaper reports stated the RTGS was still not operational, and part of the reason was that the Zimbabwean Government had not paid the company responsible for fitting the system. The Zimbabwe Stock Market, and consequentially the OMIR, crashed on 20 November when allegations of market manipulation became public. ZSE chief executive Emmanuel Munyukwi revealed that a large number of multi-quad-, quin-, and sextillion cheques had bounced. Old Mutual has not traded since 20 November, so no meaningful OMIR figures are available. It is estimated that the OMIR on 25 November would have been 649,374,262,960,211. |
|
| December | 76,620.00 (1st) 83,613.46 (2nd) 89,826.13 (3rd) 100,330.21 (4th) 111,126.89 (5th) 128,734.67 (8th) 140,085.70 (9th) 154,661.25 (10th) 226,954.13 (11th) 404,294.50 (12th) 925,825.00 (17th) 1,151,656.00 (18th) 1,423,462.00 (19th) 1,748,530.00 (23rd) 2,133,117.00 (24th) 2,772,250.00 (29th) 3,641,246.00 (30th) 4,894,167.00 (31st) |
2,000,000 (cash)‡ (2nd) 5,300,000 (cash)‡ (4th) 10,000,000 (cash) (5th) 25,000,000 (cash) (9th) 30,000,000 (cash)‡ (10th); 60,000,000 (cash) (12th) 150,000,000 (cash)‡ (16th) 200,000,000 (cash)‡ (17th) 600,000,000 (cash)‡ (19th) 9,000,000,000 (cash) (22nd) 2,000,000,000 (cash)‡ (24th) |
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| 2009 | January | 5,601,509 (2nd) 6,386,667 (5th) 8,042,778 (7th) 8,676,674 (8th) 9,326,444 (9th) 10,148,113 (12th) 11,171,474 (13th) 13,856,763 (14th) 15,273,676 (15th) 16,744,890 (16th) 18,683,139 (19th) 20,215,883 (20th) 25,599,608 (21st) 30,577,532 (22nd) 36,844,444 (23rd) 44,796,944 (26th) 415,888,889 (27th) 1,407,917,306 (28th) 3,429,836,806 (29th) 7,039,188,034 (30th) |
40,000,000,000 (12th) 3,000,000,000,000 (15th) 1,000,000,000,000 ‡(16th) 5,000,000,000,000 ‡(21st) 10,000,000,000,000 (22nd) 13,000,000,000,000 (23rd) 30,000,000,000,000 (27th) 40,000,000,000,000 (28th) 100,000,000,000,000 (29th) |
35,000,000,000,000,000 (1st) - UN Rate 150,000,000,000,000,000 (29th) - UN Rate |
|
| February | 12,336,416,667 (2nd) |
250,000,000,000,000 (1st) 300,000,000,000,000 (2nd) |
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Devaluation of the fourth dollar
On 2 February 2009, the RBZ removed 12 zeros from the currency, with 1,000,000,000,000 (third) Zimbabwe dollars being exchanged for 1 new (fourth) dollar. Although the dollar was later abandoned on the 12 April 2009, exchange rates were maintained at reasonable intervals for some time.| Exchange rates of the fourth dollar (ZWL) | |||||
|---|---|---|---|---|---|
| Date | Official rate http://www.rbz.co.zw/ | Parallel rate |
United Nations rate (Source: ) |
Notes | |
| 2009 | February | 22.00 (3rd); 24.51 (4th) 28.54 (5th); 32.19 (6th) 35.34 (9th); 38.80 (10th) 42.32 (11th); 46.07 (12th) 49.87 (13th); 53.00 (16th) 58.04 (17th); 62.70 (18th) 66.49 (19th); 71.21 (20th) 76.22 (23rd); 81.58 (24th) 86.15 (25th); 91.39 (26th) 95.42 (27th) |
300 (2nd) |
150,000 (3rd) |
|
| March | 99.67 (2nd); 103.29 (3rd) 108.01 (4th); 113.12 (5th) 117.26 (6th); 121.85 (9th) 126.11 (10th); 131.00 (11th) 134.92 (12th); 138.58 (13th) 143.42 (16th); 150.52 (17th) 156.69 (18th); 163.34 (19th) 170.39 (20th); 177.25 (23rd) 186.61 (24th); 193.52 (25th) 199.76 (26th); 206.74 (27th) 209.62 (30th); 213.07 (31st) |
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| April | 221.29 (1st); 225.83 (2nd) 230.68 (3rd); 238.94 (6th) 244.81 (7th); 245.21 (8th) 249.40 (9th); 255.19 (14th) 259.10 (15th); 263.94 (16th) 266.64 (17th); 271.04 (20th) 294.18 (24th); 306.68 (29th) 309.31 (30th) |
12 April: Zimbabwe Dollar suspended. | |||
| May | 315.23 (4th); 319.13 (5th) 328.36 (6th); 320.02 (7th) 326.26 (8th); 329.65 (11th) 332.26 (12th); 336.46 (13th) 345.12 (14th); 350.30 (15th) 354.58 (19th); 357.48 (20th) 360.64 (21st); 363.14 (22nd) |
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| June | 363.48 (16th) |
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| July | 371.39 (16th) |
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| August | 361.62 (28th) |
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See also
- Hyperinflation in ZimbabweHyperinflation in ZimbabweHyperinflation in Zimbabwe began shortly after destruction of productive capacity in Zimbabwe's civil war and confiscation of white-owned farmland. Food output capacity fell 45%, manufacturing output 29% in 2005, 26% in 2006 and 28% in 2007, and unemployment rose to 80%...
- Banknotes of ZimbabweBanknotes of ZimbabweThe paper money of Zimbabwe is part of the physical form of Zimbabwe’s four incarnations of the dollar . The banknotes of the first dollar replaced those of the Rhodesian dollar at par in 1980 following the proclamation of independence...
- Least valued currency unitLeast valued currency unitThe least valued currency unit is the currency in which a single unit buys the least number of any given other currency or the smallest amount of a given good. Most commonly, the calculation is made against a major reserve currency such as the United States dollar or the euro...
- Economy of ZimbabweEconomy of ZimbabweThe economy of Zimbabwe has shrunk significantly after 2000, resulting in a desperate situation for the country and widespread poverty from among others 94% unemployment. The participation from 1998 to 2002 in the war in the Democratic Republic of the Congo set the stage for this deterioration by...
- RedenominationDenomination (currency)Denomination is a proper description of a currency amount, usually for coins or banknotes. Denominations may also be used with other means of payment like gift cards. See also Redenomination.-Subunit and super unit:...
- HyperinflationHyperinflationIn economics, hyperinflation is inflation that is very high or out of control. While the real values of the specific economic items generally stay the same in terms of relatively stable foreign currencies, in hyperinflationary conditions the general price level within a specific economy increases...
External links
- Scan of Reserve Bank of Zimbabwe $5,000,000,000 Special Agro Cheque.
- BBC: Zimbabwe sees record inflation
- CNN: Zimbabwe's inflation surpasses 1,000 percent
- Telegraph: In Zimbabwe, a small bag of groceries now costs millions
- Zimdollar
- http://www.zimbabwesituation.com
- Zimbabwe launches $200,000 note
- Zimbabwe inflation hits new high (Depicts the front of the $200,000 Bearer Cheque)