15 Jul The Silly Circumstances of Zimbabwean Dollar: Z$10 Billion for a Burger
You might have heard Zimbabwean dollar somewhere in news, word of mouth, or maybe even internet memes. Because Zimbabwean currency has gone through a hyperinflation in the past, making it’s value to plummet so hard, a single note of one hundred trillion Zimbabwean dollar is printed. This one trillion note is might be the one that caught your attention in this currency, and we’re sorry to let you down but that dollar bill worth almost to nothing. Although, Zimbabwe begin to recover from the silly blunder, and this article will explain the process.
Hyperinflation and Zimbabwe Currency
The reason that Zimbabwean currency was in chaos back then, was the heavy case of inflation. For a reminder, inflation is when a currency of a country has decreased in value over time, while general level of prices for goods and services is rising in consequence. The root cause of inflation is the increase of the supply of money, when a country printed too much money and giving it away to the citizens, devaluing it’s purchasing power in the process. Apparently, that is the mistake Zimbabwe has done in th past.
In 2008, Zimbabwe is facing a series of economic obstacles, poverty, and unemployment rate. In response for the issue, Zimbabwean government decided to print more money. This of course leads to an inflation, a hyperinflation even, where in November 2008 the estimated inflation rate was 79,600,000,000 percent. Many reasons that made the inflation so high, is money printing, high national debt, price controls (which cause shortages of goods), decline in economic output and export earnings.
The value of the currency plummeted so hard, the government print 1 trillion, 10 trillion, and 100 trillion Zimbabwean dollar bill. In October 2008, 1 USD worth 2,300,000 ZWD, one Burger King’s Whopper cost $4, so in Zimbabwe it could’ve cost around Z$10 Billion. Worst thing is, the inflation rate just keep getting higher month by month. Zimbabwe had to keep printing money, while prices would change by the minute, causing stress revolving around the swaying money value, and greatly affect the life of Zimbabwean citizens.
This hyperinflation changes the lifestyle of Zimbabwean citizens by 180 degrees. People couldn’t afford basic goods because prices rising faster than wages and incomes. No credits available, banks were closed and unwilling to lend any money to citizens. Anyone who received their money had to either exchange it into a foreign currency or just spend straight away. As Zimbabwean dollar become worthless, citizens try to rely on the barter system. Anyone with savings lost everything, because the value of their savings is almost to none.
The Current State of Zimbabwean Dollar
Former Prime Minister of Zimbabwe Robert Mugabe, stated that the hyperinflation is caused by greedy businesses that demand price rises. This encouraged him to set up price controls in which become one of the contributor of the Zimbabwean dollar collapse. This hyperinflation definitely can’t go on without being resolved, so the government eventually stopped printing Zimbabwe dollars and normalised the practice of using the US dollar. Since 2009, Zimbabwe has used other currencies to replace the failing Zimbabwean dollar.
Zimbabwe used multiple currencies in some cases, but for general use by the public, U.S. dollar is most preferable. So the currency that Zimbabwe chooses is U.S. dollar and South African rand alternatively, and thanks to this multiple currency system, Zimbabwe economy is healed through deflation. As for the previous hyper-inflated Zimbabwe currency, like the hundred trillion, ten trillion, and one trillion bank note, could be exchanged for U.S. dollars until the end of April 2016 (unfortunatly, it only worth only about $0.40).
Speaking of the current condition of a country’s economy, we got Chinese Economy of a Giant: Country’s amazing GDP of $15.66 Trillion for you to read.
A decade later, Zimbabwe is making bold move by printing the the country’s first Zimbabwean dollar notes, the currency is making a comeback in 2019. Zimbabwe’s Central Bank hopes that the new notes will ease a severe cash shortage as the country suffers a deepening economic crisis. As the original Zimbabwe currency is making a comeback, U.S. dollars were banned in June 2019 by the central bank, saying that Zimbabwe need to return to normality. Up to this day, 1 USD is worth 361.9 in Zimbabwean dollar.