Zimbabwe zeroes

[Harald]

With its latest measure the Reserve Bank of Zimbabwe has now removed altogether 25 zeroes from its currency since 1st August 2006. Means that the country is now ranked third in this sad competition and close to reach Yugoslavia (27 zeroes between January 1990 and July 1994) and Hungary (29 zeroes between mid 1945 and August 1946).

Even if the new Monetary Policy Statement 2009 announces measures that could finally tame hyperinflation there are probably more zeroes to go. So, Zimbabwe remains a candidate for this title that nobody wants.


BTW, I am not sure that it really matters economically if you have to cross out, say, six zeroes or twenty. whatever possession you had in monetary form is gone anyway and society is thrown back to a sort of pre-monetary status.


cheers
--
Harald

[translateltd]

I guess, too, it depends how far back you take the calculations - the Yugoslav dinar was revalued by 100 in the 1960s, which would take the total number of zeroes to 29, making it first-equal with Hungary.

[Figleaf]

I hear the gov't now pays its civil servants in USD. If they accept taxes in USD as well (They'd be mad not to) the Zimbabwe dollar has ceased to exist. Remaining banknotes will quickly be unacceptable anywhere. These notes will become really, really cheap for collectors. Nowhere will the consequence be greater than in the gov't budget. The state can now spend only what it receives in USD. That should be the end of the support of the army for the Mugabe faction, so it will fall.

Normally, a new gov't should be supported with fresh loans and stuff. Except that all OECD gov'ts have a more pressing priority: their own financial sector. Japan and EU countries may have some money budgeted, but the US will be hard pressed to find sources of fresh money. That leaves the IMF and the World Bank. I expect the IMF to turn down any request, but the World Bank may be able to lend some. It looks like Zimbabwe suffering will not be over yet, even in the best of circumstances. Meanwhile, unemployment stands at 70% ...

Peter

[BC Numismatics]

Peter,
  It won't be too long before the new coalition government in Zimbabwe collapses,as the M.D.C. ministers are being sidelined by Z.A.N.U.-P.F.,& Robert Mugabe is doing his utmost to try & undermine Morgan Tsvangarai in the same way that he sidelined the late Joshua Nkomo.

The Reserve Bank of Zimbabwe's policies have failed,as the Zimbabwean Dollar has joined the list of currencies that were hit by hyperinflation - the Austrian Krone,the German Mark,the Hungarian Pengo,the Turkish Lira,the Zairean Zaire,the Congolese Franc,the Argentinian Peso,& the Yugoslavian Dinar.

Aidan.

[Harald]

I hear the gov't now pays its civil servants in USD. If they accept taxes in USD as well (They'd be mad not to) the Zimbabwe dollar has ceased to exist. Remaining banknotes will quickly be unacceptable anywhere. These notes will become really, really cheap for collectors. Nowhere will the consequence be greater than in the gov't budget. The state can now spend only what it receives in USD. That should be the end of the support of the army for the Mugabe faction, so it will fall.
(snip)

Peter

Foreign currencies like the USD or the EUR have been made legal tender (at least temporarily) when the currency reform was introduced end of January. this will probably dollarise the economy (USD not ZWD) and thereby limit the amount of money in circulation. In Yugoslavia the German mark was used as parallel currency to stabilise the dinar.

At the end of the process (in case it works out) a new currency will be introduced. In Zimbabwe they were talking about a future unit called "ivhu", which means "soil" in the Shona language. Would be a sort of reminder of the German Rentenmark.

cheers
--
Harald

[Harald]

I guess, too, it depends how far back you take the calculations - the Yugoslav dinar was revalued by 100 in the 1960s, which would take the total number of zeroes to 29, making it first-equal with Hungary.

I would limit such type of statistics to one hyperinflationary surge.
BTW, the Hungarians would still remain "top" since they introduced the pengö at a parity of 12'500 korona. So adding up the two inflations they come up with 33 zeroes.

cheers
--
Harald

[BC Numismatics]

At the end of the process (in case it works out) a new currency will be introduced. In Zimbabwe they were talking about a future unit called "ivhu", which means "soil" in the Shona language. Would be a sort of reminder of the German Rentenmark.

Harald,
  I haven't heard of a proposal to replace the Zimbabwean Dollar with a totally new currency unit.

There was a debate in Namibia to replace the Rand.The names 'Kalahar' (after the Kalahari Desert) & 'Namibian Mark' were suggested.The latter was rejected,due to anti-German sentiment in Hereroland.In the end,the Namibian Dollar was introduced in 1993,but circulating alongside the Rand.

Aidan.

[Harald]

Harald,
  I haven't heard of a proposal to replace the Zimbabwean Dollar with a totally new currency unit.

Aidan.

It was announced sometimes in 2006 when the first measures against inflation (not yet hyperinflation) were taken. I have no idea if it is still around in someone's drawer. In any case it would be nice to have something more imaginative than "dollar".

cheers
--
Harald

[Figleaf]

In my book, a currency is used when a) you can pay your taxes with it and b) there is a steady (but not necessarily sufficient) supply of it. Zimbabwe has announced that it pays its civil servants in USD, which satisfies the "steady supply criterium. If the gov't accepts USD for taxes (if they can still collect taxes, now that unemployment stands at something like 70%) the Zimdollar is defunct and the USD circulates.

Peter

[chrisild]

This weekend the Financial Times Deutschland wrote that Zimbabwe does not have "its own" currency any more. http://www.ftd.de/politik/international/:Inflation-von-230-Millionen-Prozent-Simbabwe-kassiert-eigene-W%E4hrung/499438.html

According to the article (in German, source Reuters which in turn refers to the government controlled Sunday Mail) the Zimbabwe Dollar will be disactivated for at least one year. Guess those zeroes are now a thing of the past. Not that it helps the economy there, but it may help collectors who aim at a "complete" collection ...

Christian

[Figleaf]

With unemployment now at 90%, the economy is essentially dead. The only ones who are active in the economy are those maintaining the government. There is probably a vast black economy, where people grow their own food and barter for things they don't have and taxes are not paid.

It sounds funny, but this is a good basis for a new start. Unlike the government, which is apparently waiting for industry to pick up, I think agriculture should be allowed to pick up. You can help start that by making sure all pieces of arable land are being used. This should lead to an agricultural surplus, which allows for reinstatement of formal markets and a modest tax income. However, to grow any further, you have to get a government that has the trust of the people. Otherwise, the surplus is converted to money and shipped out of the country. This is the hard part. It does not mean a coalition "government" where the same criminals stil have a say, but new faces and new rules, weeding out the cronies and the corrupt. Before that, lending to Zimbabwe is as useful as direct, unconditional financial support for the criminals and the cronies. It will not build trust and it will not be used to build the domestic economy.

Peter

[a3v1]

It's a shame that everybody being able to work the land was ousted and replaced by Mugabe's cronies who knew nothing about agriculture.
Anyway, the time of the big zeroes seems to be over.
Regards,
a3v1

[Harald]

This weekend the Financial Times Deutschland wrote that Zimbabwe does not have "its own" currency any more. http://www.ftd.de/politik/international/:Inflation-von-230-Millionen-Prozent-Simbabwe-kassiert-eigene-W%E4hrung/499438.html

According to the article (in German, source Reuters which in turn refers to the government controlled Sunday Mail) the Zimbabwe Dollar will be disactivated for at least one year. Guess those zeroes are now a thing of the past. Not that it helps the economy there, but it may help collectors who aim at a "complete" collection ...

Christian

It is not quite clear (to me) what was actually meant by this news. How can you suspend or deactivate a currency?
The New Zimbabwean Dollar (the one with the many zeroes) was already replaced by another (newer) dollar with 12 zeroes less. At the same time payments in hard currencies became legally permitted. Banknotes for the currency reform were already presented by the national bank (supposed to circulate in parallel with the previous notes). Maybe the issue of the new banknotes has been stopped, since probably everyone uses USD or ZAR anyway.

cheers
--
Harald

[BC Numismatics]

Harald,
  I don't think that the Zimbabwean Dollar will be reintroduced while Mugabe is still in power.

Tedious and offensive language deleted

The currencies that are in circulation are these;

Euros.

Pounds Sterling.

Pula.

Rand.

U.S. Dollars.

There is also native Zimbabwean currency in circulation denominated in Litres - petrol vouchers issued both privately,& by the Reserve Bank of Zimbabwe.I wouldn't mind getting some of those R.B.Z. ones,as they are printed on banknote paper as well.

Aidan.

[Figleaf]

Coins available at last   
Written by Fani Machingura, Wednesday, 28 July 2010

HARARE – The cash headache that has plagued Zimbabweans for years is set to end after CBZ started last week to exchange coin with South African and USA, bank notes.

This development comes hard on the heels of the announcement by the Minister of Finance, Tendai Biti, during his presentation of the Mid-Term Fiscal policy review, that coins and smaller bills from other countries will be brought into the country to ease the continued shortage of cash - especially coins.

Biti in his statement said, "Under the current multi currency regime, the inadequacy of smaller denominations has posed a number of challenges in transactions. Treasury will therefore be facilitating in the second half of 2010 the importation of foreign smaller denominations and coins."

"CBZ is offering South African coins R1, R2 and R5 in exchange for South African  bank notes a rate of 1 to 1 or United States dollar at the rate of the day," said CBZ in a statement.

Other banks in the country are expected to follow the CBZ, which will be a major relief to consumers.

Commuters have at times been forced to leave their money due to non-availability of change, while shoppers have been forced to make unnecessary purchases.

Source: The Zimbabwean