Zimbabwean dollar
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| Zimbabwean dollar | |||
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| ISO 4217 Code | ZWD (initially ZWN) | ||
|---|---|---|---|
| User(s) | Zimbabwe | ||
| Inflation | 1,729.9% (Feb 2007) | ||
| Source | Reserve Bank of Zimbabwe | ||
| Subunit | |||
| 1/100 | cent | ||
| Symbol | $ | ||
| Coins | None | ||
| Banknotes | (bearer cheques) 1, 5, 10, 50 cents, $1, $10, $20, $50, $100, $500, $1000, $5000, $10 000, $50 000, $100 000 | ||
| Central bank | Reserve Bank of Zimbabwe | ||
| Website | www.rbz.co.zw | ||
The revalued Zimbabwean dollar (currency code ZWD) has been the currency of Zimbabwe since August 2006, when it replaced the old Zimbabwean dollar (ZWD) at a rate of 1,000 old ZWD = 1 ZWD (revalued). The 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 remains 'ZWD'.
It is normally abbreviated with the dollar sign $, or alternatively Z$ to distinguish it from other dollar-denominated currencies. It is divided into 100 cents.
Thirteen new bearer cheques were released on 1 August 2006 in denominations from 1 revalued cent to $100,000 (revalued).
Contents |
[edit] History
The old Zimbabwean dollar replaced the Rhodesian dollar at par, which in turn had been adopted in 1970 as a decimalisation replacement of the Rhodesian pound at a rate of 2 Rhodesian dollars to 1 Rhodesian pound (R$ 0.71 = US$ 1.00). At the time of independence in 1980, one Zimbabwean dollar was still worth more than the US dollar (ZWD 0.68 = USD 1.00), but the currency's value has eroded rapidly over the years. On 26 July 2006 the parallel market value of the Zimbabwean dollar fell to one million to the British pound. [1]
The Zimbabwean dollar was redenominated on 1 August 2006 at the rate of 1 revalued dollar = 1000 old dollars. The subunit is still cent, 1/100 of a revalued dollar. Also on 1 August 2006 the Government of Zimbabwe devalued the Zimbabwean dollar by 60% vs. the US dollar (see exchange rate history table below), from 101,000 old dollars (101 revalued) to 250 revalued dollars.
[edit] Inflation
| Zimbabwean inflation rates since Independence | |||||||||||
| Date | Rate | Date | Rate | Date | Rate | Date | Rate | Date | Rate | Date | Rate |
|---|---|---|---|---|---|---|---|---|---|---|---|
| 1980 | 7% | 1981 | 14% | 1982 | 15% | 1983 | 19% | 1984 | 10% | 1985 | 10% |
| 1986 | 15% | 1987 | 10% | 1988 | 8% | 1989 | 14% | 1990 | 17% | 1991 | 48% |
| 1992 | 40% | 1993 | 20% | 1994 | 25% | 1995 | 28% | 1996 | 16% | 1997 | 20% |
| 1998 | 48% | 1999 | 58% | 2000 | 56% | 2001 | 132% | 2002 | 139% | 2003 | 385% |
| 2004 | 624% | 2005 | 586% | 2006 | 1281% | 2007 | 1730% | ||||
Rampant inflation and the collapse of the economy have severely devalued the currency, with many organisations using the US dollar, the euro, the pound sterling, or the South African rand instead.
Early in the 21st century Zimbabwe started to experience hyperinflation. Inflation reached 624% in early 2004, then fell back to low triple digits before surging to 1,281.1% in December 2006. [2]
If policies do not change, the IMF has predicted an inflation rate of over 4000% for the year 2007. [3]
The year 2007 has started badly as inflation reached another record high of 1729.9% in February. [4] On March 19th, the IMF predicted that inflation will most likely hit 5,000%.[5]
[edit] Money supply
On 16 February 2006, the governor of the Reserve Bank of Zimbabwe, Dr Gideon Gono, announced that the government had printed ZWD 20.5 trillion in order to buy foreign currency to pay off IMF arrears.[6]
In early May 2006, Zimbabwe's government announced that they would produce another 60 trillion Zimbabwean dollars. [7]
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 May 29, Reserve Bank officials told IRIN that plans to print about Zim$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 ten trillion old dollars (22% of the money supply) had not been exchanged for revalued dollars. These bearer cheques were demonetized.
[edit] Exchange rate history
This table shows a condensed history of the foreign exchange rate:
| Year | 1983 | 1997 | 2000 | 2002 (Jun) | 2005 (Mar) | 2006 (Jan) | 2006 (July) |
|---|---|---|---|---|---|---|---|
| ZWD per 1 USD | 1 | 10 | 100 | 1,000 | 10,000 | 100,000 | 500,000+ |
| Year | 2006 (Aug) | 2006 (Sept) | 2006 (Dec) | 2007 (Jan) | 2007 (Feb) | 2007 (Mar) | 2007 (Apr) - |
| Revalued ZWD per 1 USD |
650(000) | 1,000 | 3,000 | 4,800 | 7,500 | 26,000 | 30,000- |
This table shows in more detail the historical value of one U.S. dollar in Zimbabwean dollars:
| Date | Official Rate | Free / 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 FFR, DEM, ZAR, CHF, GBP, USD |
| April - 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 1999 March 31, the Official Exchange Rate was pegged at ZWD 38 per USD; By 1999 (Dec) the parallel market had re-emerged. |
| 2000 | 38 to 55 | 56 to 62 (Jul); 65 to 70 (Aug.) | In Aug 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 Nov. foreign exchange bureaux 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, semi-weekly (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) | Aug 24 - Zimbabwean dollar becomes least valued currency unit |
| 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); 99,202 (Jan 24); 101,195.54 (Apr 28) (click for details) | 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 09); 340,000 to 350,000 (June 16); 400,000 (June 21); 450,000 (July 01); 520,000 (July 09)[8]; 550,000 (July 27)[9] | Economists predict an unofficial rate of nearly ZWD 250,000 to the US dollar by mid-2006. |
| Jan 24 - RBZ caps daily varience 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. |
| Date | Official Rate (Revalued dollar) | Free / Parallel Rate (Revalued dollar) | Notes |
|---|---|---|---|
| 2006 (From Aug 1) | 250 (250,000 old) | 550 (Aug 01); 650 (Aug 03); 650 to 700 (Aug 24); 700 to 800 (Sep 08 - high volume transactions) [10]; 850 (Sep 14) [11]; 1,200 to 1,300(Sep 28) or 1,500 (Sep 28 - high volume transactions) [12]; 1,500 (Oct 11) [13]; 1,700 (Nov 5) [14]; 2,000 (Nov 18) [15]; 2,400 (Nov 29)[16]; 3,000 (Dec. 24)[17] | Aug 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) |
| 2007 | 250 | 3,000 (Jan 1) [18]; 3,200 (Jan 11) [19]; 3,500 (Jan 18) [20]; 4,000 (Jan 20) [21]; 4,200 (Jan 22) [22]; 6,000 (Jan 26) [23]; 4,800 (Feb 2) [24]; 5,000 (Feb 12) [25]; 6,600 (Feb 23) [26]; 7,000 (Feb 26) [27]; 7,500 (Feb 28) [28]; 8,000 (Mar 1) [29]; 10,000 (Mar 8) [30]; 11,000 (Mar 11) [31]; 12,000 - 17,500 in very large transaction (Mar 16) [32]; 16,000 (Mar 19) [33]; 20,000 (Mar 21) [34]; 24,000 (Mar 22) [35]; 25,000 (Mar 26) [36]; 26,000 (Mar 29) [37]; 30,000 (Apr 1) [38] | Zimbabwean dollar becomes least valued currency unit around March 21; In March, the parallel rate becomes extremely erratic, with reported rates varying significantly |
[edit] Coins
Coins were issued since 1980 in denominations of ½, 1, 5, 10, 20, and 50 cents as well as ZWD 1, 2, and 5. (click for image) They remain legal tender, but, due to their minuscule value, they function as gambling tokens in Zimbabwean casinos.
Plans, by the Reserve Bank of Zimbabwe, for new Z$5,000 and Z$10,000 coins were announced in June 2005 (click for story). They never appeared, victims of hyperinflation.
[edit] Banknotes, traveller's cheques and bearer cheques
[edit] New currency (2005-6), revaluation (2006), new currency (2007)
In October 2005, the head of the Reserve Bank of Zimbabwe, Dr. Gideon Gono, announced "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.
On 31 July 2006, the Reserve Bank of Zimbabwe revalued the Zimbabwe dollar by one thousand to one. Thirteen new bearer cheques were issued and people were only given 21 days to exchange the old bearer cheques.
At the same time, the Zimbabwean dollar was devalued by 60% and the new exchange rate set at 250 revalued dollars per 1 U.S. dollar.
The problem-ridden 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 (a nice windfall for the RBZ)[39].
Other problems included, but were not limited to:
- behaviour by police/youth militias who set up roadblocks and seized currency beyond the daily deposit limits;
- invasions of businesses and homes to seize cash;
- shortages of the new bearer cheques (even at banks);
- refusal of many businesses and people to accept the old bearer cheques;
- chronic shortages of "small" bills to make change; and
- the rapidity of the change over, particularly for people in remote, rural towns where information on the changes was received too late to exchange their bearer cheques.
Most economists have blasted the move as merely political. They claim that without drastic changes in the policies of the RBZ, the zeroes will come back rapidly.
As people panicked to dump their old cash, the revaluation process drove up prices on the Zimbabwean Stock Exchange to levels that, while still below the 1,000% inflation, are the highest returns of any market in the world.
On December 12, 2006, Dr. 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 announces the monetary policy review statement in January 2007. It was not possible to get immediate confirmation from Gono's office whether the memorandum was an advise 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. [40] A possible name appears to be "ivhu", which means "soil" in Shona.[41]
On February 2, 2007, it was revealed that a new (third) dollar would be released "soon", in denominations of $1, $5, $10, $20, $100, $500, and $1,000. The $1 bill has an image of the Victoria Falls and a buffalo, the $5 the Kariba dam wall and an elephant, the $10 agricultural activity and a grain silo, the $20 portrait of a mine site and a mine with a jack hammer, $100 the botanic gardens and the Great Zimbabwe conical tower, the $500 a portrait of a dairy farm. No indications of what will be on the $1,000 [42]. However, given that inflation remains in the four digits, these banknotes are likely to remain in storage for the foreseeable future.
In February 2007, the central bank of Zimbabwe declared inflation "illegal", outlawing any raise in prices on certain commodities between March 1 and June 30, 2007. Officials have arrested executives of some Zimbabwean companies for increasing prices on their products. Economists generally suspect that such measures will be ineffective at eliminating the problem in the long term. [43] [44]
[edit] See also
[edit] References
[edit] External links
- "Zimbabwe sees record inflation", BBC News, 2006-03-10. Retrieved on 2006-10-02.
- "Zimbabwe's inflation surpasses 1,000 percent", CNN, 2006-05-12.
- Thornycroft, Peta. "In Zimbabwe, a small bag of groceries now costs millions", The Daily Telegraph, 2006-07-15. Retrieved on 2006-10-02.
- zimbabwesituation.com (2006-07-27). Zim dollar hits a million to the pound as Murerwa unveils 'scandalous' supplementary budget. Retrieved on 2006-10-02.
- zimbabwesituation.com (2006-07-31). Zimbabwe devalues, redenominates currency. Retrieved on 2006-10-02.
- zimbabwesituation.com (2006-09-15). Zimbabwe Aug inflation jumps to 1,204 pct yr/yr. Retrieved on 2006-10-02.
- zimbabwesituation.com (2006-11-04). Embattled currency to hit $16 000 per US dollar. Retrieved on 2006-11-05.
- zimbabwesituation.com (2006-11-17). Murerwa wins on devaluation. Retrieved on 2006-11-17.
- zimbabwesituation.com (2006-11-29). Zimdollar takes heavy knock on black market. Retrieved on 2006-11-29.
| Preceded by: Rhodesian dollar Reason: independence recognized Ratio: at par |
Currency of Zimbabwe 1980 – July 31, 2006 |
Succeeded by: Revalued dollar Reason: inflation Ratio: 1 revalued dollar = 1000 old dollars |
| Preceded by: Old dollar Reason: inflation Ratio: 1 revalued dollar = 1000 old dollars |
Currency of Zimbabwe August 1, 2006 – |
Succeeded by: Current |
