Sunday, July 19, 2015

Zimbabwe Dollar – The World’s Weakest Ever Currency

When Zimbabwe got independence, the Zimbabwean dollar was more worthy than the US dollar. In its starting years, Zimbabwean dollar was higher in value against the US dollar at the price of 1.59 but since then political chaos, hyperinflation and the failure of the economy has severely brought down the Zimbabwe Dollar and it is becoming one of the weakest currencies in the world. Zimbabwe experienced strong growth and development in early years. Economic indicators for the country were strong. Zimbabwe Dollars series from 10 to 100 billion printed within one year period. The importance of the currency decreases because of the level of the hyperinflation (raising prices). The Reserve Bank of Zimbabwe blamed for the failure on the sanctions imposed by the United States of America, the IMF and the EU for the chaos and instability of the currency.

From 1980 to April 12, 2009 Zimbabwean dollar was the official currency of Zimbabwe.  As a result of political disorder and the collapse of economy, the Zimbabwean dollar having currency code ZWD (symbol: Z$) is no longer in exchange and flow.  On 6 September 2007, the Zimbabwe dollar was getting weaker again and this time the decrease was by a ratio of by 92% to give an official trade rate of ZW$30,000 to US$1, while the black market trade rate was likely to be ZW$600,000 to US$1. The first dollar undervalued from 0.6788 R$ to 1 US$ in 1978, the second dollar started off on 1 August 2006 with an official rate of 250 and a comparable rate of 550 to the US$. In July 2008 the dollar was devalued again, this time the rate of exchange reached 500 billion to 1 US dollar.

The Zimbabwean dollar was effectively abandoned for an indefinite period from 12 April 2009. The United States dollar has been accepted as the official currency for all governmental dealings. Zimbabwean dollar is so much devalued that Zimbabwean people started selling Zimbabwean currency for dollars. The 100 trillion dollar new notes were selling for 17 US dollar. The general postal service, was also asking for US Dollars, $5 for a 100-billion-dollar note from its customers. In February 2009, a thing which we can buy for 1 US dollar, same are available at the rate of 300,000,000,000,000 Zimbabwean dollar. A time had also come for the Zimbabwean people when bread was not affordable and became a luxury item.

On 29 January 2014 the Zimbabwe central bank announced that the US dollar, South African rand, Botswana pula, Pound sterling, Euro, Australian dollar, Chinese yuan (renminbi), Indian rupee and Japanese yen would all be acknowledged as legal currency within the country. On 12 June 2015, the Reserve Bank of Zimbabwe said it will begin a process to demonetize the Zimbabwean dollar, to officially value the fiduciary currency at rate of 0. The old unit of currency must be retired and replaced with a new currency unit. The plan is to withdraw currency from use and to have totally exchange to the US dollar by the end of September 2015.

The Zimbabwean government stated that it would give 5 US dollars to all the countrywide bank accounts having balance more than 175 quadrillion Zimbabwean dollars and exchange rate Zimbabwean dollars to US dollars is 1 US dollar for every 35 quadrillion Zimbabwean dollars. Advisors believe that an effort for the improvement of the country's political corruption and immature fiscal policies will be fundamental for the establishment of social and economic stability in the long run. Many countries, such as the U.S. and Britain have to some extent suspended financial support for Zimbabwe, and demanding that reform needs to take place before any further help is offered. The current measures have been taken by Parliament are hopeful signs that Zimbabwe is finally taking necessary measures to fix the market system.

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