Demonetisation of Zimbabwean Currency

Zimbabwe government has decided to finally decommission (retire) its national currency, Zimbabwe
dollar (ZWD). Every local citizen will get the US currency notes in scheme which comes to only 1 USD
in exchange of 35,000,000,000,000,000 ZWD (35 million billion ZWD).
This situation arose because of certain measures taken and the inflation and hyperinflation
(uncontrolled inflation) which eroded and devalued the currency. The last estimated inflation had
been recorded at 79.6 billion % in the year 2008.

Zimbabwean Inflation Rates

Year

Rate

1980

7.00%

1991

48.00%

2001

112.10%

2002

198.93%

2003

598.75%

2004

132.75%

2005

585.84%

2006

1281.11%

2007

66212.30%

66 thousand %

231150888.87%

231 million %

79600000000.00%

79.6 billion %

2008 Jul.
2008 Mid-Nov.

Background
The currency was introduced in the year 1980 replacing the Rhodesian dollar. The currency was
valued at 1.47 USD per ZWD. But as this was not a correct valuation, the value of the currency eroded
over the years.
Zimbabwe spiraled into deep economic crisis after President Robert Mugabe introduced a radical
policy of land distribution in the late 1990s and early 2000s. Facing chronic shortages of basic
commodities, the central bank kept printing money to fund budget deficits, ultimately causing prices
to go crazy.
The currency was redenominated (adjust for inflation and currency devaluation) three times till the
year 2009.

FINNACLE

2015

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Redenomination

Currency code

Value

Date

1 August 2006

ZWN

103 ZWD

1 August 2008

ZWR

1010 ZWN

2 February 2009

ZWL

1012 ZWR (=1025 ZWD)

At the height of Zimbabwe's economic crisis in 2008, Zimbabweans had to carry plastic bags with
bundles of bank notes to buy basic goods like bread and milk. Prices were rising at least twice a day.
The unemployment increased and the public services collapsed. The economy shrank by 18% as
reported by World Bank.

Year 2009 - Year of Change

The country had stopped using its national currency in the year 2009 and started using currencies of
various countries such as Indian Rupee, US Dollar, South African Rand, etc. for the day-to-day
transactions.
The benefits of multi-currency were significant as all sectors in the economy experienced an
improvement with real gross domestic product increasing from a negative 14.8% in 2008 to a positive
5.7% by the end of 2009. Stability in price level was achieved and inflation dropped to single digits.

Current Situation
The GDP annual growth rate has been in positive figures in all years since then but growing slowly,
latest been 4% in year 2014. The inflation rate in April 2015 was -2.70%.
The old currency notes with the public have been now allowed to be exchanged for US Dollar. The
target to finish the process has been kept as September 2015. The currency used now are South
African Rand, Botswana Pula, Pound Sterling, Indian Rupee, Euro, Yuan and the United States dollar.

FINNACLE

2015

SDMIMD

References
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2.
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4.
5.

http://www.tradingeconomics.com/zimbabwe/inflation-cpi
http://www.rbz.co.zw/
https://en.wikipedia.org/wiki/Zimbabwean_dollar
http://money.cnn.com/2015/06/12/news/zimbabwe-currency-dollar/?sr=cnnitw
http://www.telegraph.co.uk/finance/11669652/Thatll-be-175-quadrillion-Zimbabwean-dollarsplease.html

FINNACLE

2015

SDMIMD