HARARE, Zimbabwe (CNN) -- Zimbabwe slashed 12 zeros from its currency as hyperinflation continued to erode its value, the country's central bank announced Monday.
Patrick Chinamasa, Zimbabwe's acting finance minister, arrives last week at Parliament to present the '09 budget.
Patrick Chinamasa, Zimbabwe's acting finance minister, arrives last week at Parliament to present the '09 budget.
"Even in the face of current economic and political challenges confronting the economy, the Zimbabwe dollar ought to and must remain the nation's currency, so as to safeguard our national identity and sovereignty. ... Our national currency is a fundamental economic pillar of our sovereignty," said Gideon Gono, governor of the Reserve Bank of Zimbabwe.
"Accordingly, therefore, this monetary policy statement unveils yet another necessary program of revaluing our local currency, through the removal of 12 zeros with immediate effect."
The move means that 1 trillion in Zimbabwe dollars now will be equivalent to one Zimbabwe dollar.
The old notes -- with the highest being 100 trillion dollars -- not enough to buy a loaf of bread -- will remain valid until June 30, after which they will cease to be legal tender. One U.S. dollar is trading above 300 trillion Zimbabwe dollars.
This third attempt to lop off zeros comes barely six months after the Zimbabwe government last adjusted its currency as it continues to lose value.
World-record inflation estimated to be in the billions of percent -- but officially at 231 million percent as of July last year -- has quickly eroded the currency's value again and again. The highest note on the new set is 500 Zimbabwe dollars.
Many Zimbabwean traders have stopped accepting the local currency, preferring foreign currency due to the hyperinflationary environment. Last week, the country's acting finance minister, Patrick Chinamasa, allowed the use of foreign currency by everyone else.
Despite the use of foreign currency, the Zimbabwe dollars are in acute shortage, resulting in many people sleeping outside their banks hoping to get money the following day.
Regarding the cash shortages, Gono blamed Germany for dropping a contract that helped the country print money.
"The country has suffered bouts of cash shortages, which have disadvantaged both the corporate and household sectors," he said.
"As a country, we have come to terms with this stubborn reality that we were put under economic sanctions by Germany, which unilaterally cut a 50-year-old contract to supply us with currency printing paper, machinery, spare parts and inks without notice in July last year."
God, that country is fucked up. What really gets me is the last paragraph: "Boo-hoo, Germany stopped helping us print paper money. Clearly they are trying to hurt our economy by dropping a big hint that we need to stop printing money, which is ruining our economy."
A Government founded upon justice, and recognizing the equal rights of all men; claiming higher authority for existence, or sanction for its laws, that nature, reason, and the regularly ascertained will of the people; steadily refusing to put its sword and purse in the service of any religious creed or family is a standing offense to most of the Governments of the world, and to some narrow and bigoted people among ourselves.
Surlethe wrote:What really gets me is the last paragraph: "Boo-hoo, Germany stopped helping us print paper money. Clearly they are trying to hurt our economy by dropping a big hint that we need to stop printing money, which is ruining our economy."
That seems to be the preferred modus operandi of all Zimbabwean bigshots: blame the foreigners, blame the whites, blame everyone except the idiots in charge of the country. Frankly I'm mildly surprised the reserve bank governor didn't attempt to implicate that Great Britain is responsible for the country's current woes as well.
Surlethe wrote:
God, that country is fucked up. What really gets me is the last paragraph: "Boo-hoo, Germany stopped helping us print paper money. Clearly they are trying to hurt our economy by dropping a big hint that we need to stop printing money, which is ruining our economy."
I wouldn’t read into it that much. Zimbabwe hadn’t paid for the paper or ink for over a year, the German company supplying it decided to stop losing money. That’s really all it is.
What’s really funny though is that to this day a number of African countries, particularly former French colonies but also many others do not print money domestically; it’s all done in foreign countries, usually France of Switzerland. The funny part comes in because this policy wasn’t originally to provide economic stability… it was a defence against military coups! That way the coup leadership couldn’t consolidate its power because they wouldn’t have free access to the money supply.
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The only comparable amount of inflation I can think of was an experiment in the early chinese kingdoms, perhaps even Pre-Yellow Emperor, wherein in order to save costs coinage was allowed to be minted by local authorities and indeed anyone in practise, rather than by the centralised state.
It ended with tiny button sized diluted tin coins which cost millions for a single egg and were traded in bags and wheelbarrows, as I remember.
But compared to Zimbabwe, that's literally nothing.
I'm not surprised - the actual value of a Zimbabwean dollar is something on the order of 10-20 Octillion for one US dollar. What makes this more hilariously sad is that just recently, the Zimbabwean government slightly acknowledged reality and said it was okay for people to openly use dollars and other currency in purchases and trade (not that they hadn't been doing so before then).
But I guess as long as the Zimbabwean government doesn't want to have to pay its employees in a foreign currency, they'll keep the one they've got.
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OsirisLord wrote:Congragulations Robert Mugabe, you've once again made the Wiemar Republic look competent by comparison.
At least the Weimar Republic had an excuse of a massive world war...
JULY 20TH 1969 - The day the entire world was looking up
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Signature dedicated to the greatest achievement of mankind.
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Wouldn't it have been better to chop a few of the zeros in the goverment?
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So they aren't likely to produce any more of those trillion dollar notes. Time to get it as a collector's item. Just so I can say, hey look, I got a trillion dollar note. As I said before, if they sold it as a collector's item off ebay they most probably would make more money than via foreign exchange.
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Countries I have been to - 14.
Australia, Canada, China, Colombia, Denmark, Ecuador, Finland, Germany, Malaysia, Netherlands, Norway, Singapore, Sweden, USA.
Always on the lookout for more nice places to visit.
If there is, then they're keeping out of sight in case they get noticed . The last thing I'd want as a sensible, sane civil servant out there is to get noticed, promoted and then surrounded by all these idiots, because you can just guess who's going to get blamed when they screw it up again...
Personally I'm still wishing South Africa or someone will go in and impose some sanity on Zimbabwe, because I just don't see Mugabe et al doing it (or even agreeing to the MDC's demands any time soon). It won't happen, but I can sit here and dream I suppose.
mr friendly guy wrote:So they aren't likely to produce any more of those trillion dollar notes. Time to get it as a collector's item. Just so I can say, hey look, I got a trillion dollar note. As I said before, if they sold it as a collector's item off ebay they most probably would make more money than via foreign exchange.
Our local Angus and Robertson store has been carrying laminated Zimbabwean notes for use as bookmarks, being sold on behalf of an AIDS charity. They've been awesome presents. People like getting 100 Million Dollars as a birthday present.
weemadando wrote:
Our local Angus and Robertson store has been carrying laminated Zimbabwean notes for use as bookmarks, being sold on behalf of an AIDS charity. They've been awesome presents. People like getting 100 Million Dollars as a birthday present.
How stingy are you? That won't even get you a biscuit.
It's good that they're using foreign currency now instead. Maybe some stability will come of it, but I'm not holding my breath. The nation is a basket case, not a bread basket.
weemadando wrote:
Our local Angus and Robertson store has been carrying laminated Zimbabwean notes for use as bookmarks, being sold on behalf of an AIDS charity. They've been awesome presents. People like getting 100 Million Dollars as a birthday present.
How stingy are you? That won't even get you a biscuit.
It's good that they're using foreign currency now instead. Maybe some stability will come of it, but I'm not holding my breath. The nation is a basket case, not a bread basket.
Indeed. This picture here sums up the situation pretty well. Granted, I'm not sure if the chap here is paying for his meal, or simply tipping the server.
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Duckie wrote:The only comparable amount of inflation I can think of was an experiment in the early chinese kingdoms, perhaps even Pre-Yellow Emperor, wherein in order to save costs coinage was allowed to be minted by local authorities and indeed anyone in practise, rather than by the centralised state.
It ended with tiny button sized diluted tin coins which cost millions for a single egg and were traded in bags and wheelbarrows, as I remember.
But compared to Zimbabwe, that's literally nothing.
[ray in 3... 2... 1]
I think Weimar Germany was as bad - although the levels of hyperinflation we are talking about make comparisons difficult. Like comparing the pain of 100 kt vs 1 mt nuclear bomb going off 5 feet from me. Doesn't really matter as the country is a wreck.
As far as the bigshots in Zimbabwe, basically one exists plus flunkies and hangers-on. Took a pretty prosperous country able to feed itself and make some money with exports, coupled with a non-disastrous switchover from white only rule into a sheer basket case.
You may be wondering what the idiots in power think.
Gono defends his actions in Zimbabwe
Martin Fletcher and Moses Mudzwiti Published:Feb 04, 2009
ZIMBABWE’S inflation rate is running at an astonishing world record five sextillion percent, making everyday transactions in the local currency all but impossible, according to economists monitoring its economy.
Economists Steve Hanke, of Johns Hopkins University, put it as high as 89.7 sextillion percent. But he gave up calculating the inflation rate in November last year, owing to the lack of reliable data.
On Monday, Gideon Gono, widely regarded as the world’s most disastrous central banker, knocked another 12 zeros off the Zim dollar in an attempt to bring the national currency back from the realm of the fantastical.
In an interview published in Newsweek yesterday, Gono defended his excessive printing of money and made the extraordinary claim that he has been vindicated by God, saying the global financial crisis has forced other countries to follow his lead.
Gono said he printed money simply so that the Zimbabwean people could survive. He noted that the rest of the world was now following his example because of the credit crunch.
“I had to print money,” he said. “I found myself doing extraordinary things that aren’t in textbooks. Then the IMF asked the US to print money. The whole world is now practising what they have been saying I should not. I decided that God had been on my side and had come to vindicate me.”
Asked by Newsweek if he considered his governorship a success, Gono replied: “I am modestly credited with the survival strategy of my country. No other [central bank] governor has had to deal with the kind of inflation levels that I deal with. [The people at] my bank [are] at the cutting edge of the country.
“What keeps me bright and looking forward to every day is that it can’t be any worse.”
Economists have poured scorn on Gono’s move to slash the street value of the Zimbabwean dollar — from Z$250-trillion to one US dollar to 250 — but locals are happy because computers, calculators and people could not cope with all the zeros.
One US dollar would now buy Z$2.5-octillion had Gono not done so.
“The zeros are too many for our machines to handle,” said Obert Sibanda, chairman of the Zimbabwe National Chamber of Commerce.
Economists pointed out that four months after he knocked 10 noughts off the Zimbabwe dollar last year, they had all returned.
Tony Hawkins, a University of Zimbabwe economist who taught Gono 20 years ago, observed that the governor was not the student of whom he was most proud.
“He was a good student but forgot whatever economics he learnt when he became a political player.”
Gono, 49, recently published an autobiography — sold only in US dollars, in violation of his own currency regulations — in which he claimed that former US president George Bush had offered him the post of senior vice-president at the World Bank last July.
Morgan Tsvangirai, leader of the opposition Movement for Democratic Change, is trying to make Gono’s removal a condition of his party joining a unity government next week.
Gono’s record is also coming under fire from within his own Zanu-PF party.
His slashing of zeros came as Zimbabwe’s cholera death toll rose to more than 3 200, raising fears that the outbreak, considered the worst ever in the world, could take several months to control. The World Health Organisation said the outbreak remains “uncontrolled”.
SDNW4 Nation: The Refuge And, on Nova Terra, Al-Stan the Totally and Completely Honest and Legitimate Weapons Dealer and Used Starship Salesman slept on a bed made of money, with a blaster under his pillow and his sombrero pulled over his face. This is to say, he slept very well indeed.
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