HomeBusiness DigestZimdollar now worth one cent

Zimdollar now worth one cent

Ngoni Chanakira

THE Zimbabwe dollar under siege from international currencies is now worth less than a cent from its 1995 level.

etica, sans-serif”>The Reserve Bank of Zimbabwe (RBZ) this week blamed spiralling inflation, currently standing at 525,8%, for the embarrassing situation.

“Inflation has escalated sharply in the last three years, rising from an average of 55% in 2000, to 455,6% by September,” the RBZ said. “This has significantly eroded the purchasing power of currency – one dollar in 1995 is now worth less than a cent, at current price levels.”

The high inflation levels have forced the central bank to print new $1 000 notes and bearer’s cheques in $5 000, $10 000 and $20 000 denominations.

However, due to the serious foreign currency shortage the RBZ is now concentrating on bearer cheques and has allegedly dumped the printing of notes.

Economists point out that this has increased inflation because there are too many cheques chasing too few goods.

Former RBZ governor Leonard Tsumba, when introducing the $500 note and the $5 coin in August 2001, said very high inflation had significantly eroded the value of money in circulation.

He said then that for example, a 1990-dollar was only worth six cents.

Tsumba said this had dramatically increased the cost of supplying notes and coins and was hurting budgetary provisions.

Zimbabwe now has a $1 000 note – the highest since Independence.

Tsumba said the increase in inflation from 15,5% in 1990 to 22% in 1995 necessitated the introduction of high bank note denominations – the $50 note in March 1994 and the $100 note in January 1995.

The former governor said the surge in inflation to 64,4% by June 2001 had further increased the public’s demand for higher currency denominations and a notable increase in the usage of the $100, thus the introduction of the $500 note.

The RBZ said during the week ending September 19 the Zimbabwe dollar depreciated by between 0,6% and 1,2% against other major trading partner currencies.

The dollar remains pegged at $824 against the greenback.

Recent Posts

Stories you will enjoy

Recommended reading