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  • Michael Chalk

Is Zimbabwe on the Brink of Recreating the Hyperinflation of the 2000s?

I am sure all those who lived in Zimbabwe between 2005 and 2010 have recurring nightmares about the rampant hyperinflation of those days. At its peak, hyperinflation in Zimbabwe eclipsed anything seen globally in the last 200 years.

In 2008, the RBZ announced the demonetisation of the Zimbabwean dollar, converting all bank accounts to US dollars at a rate of Z$1,000,000,000,000 to US$1.00. This rendered the Zimbabwean dollar worthless, as hyperinflation had reached such high levels that the largest denomination of the currency, the Z$100 trillion banknote, couldn't even buy a small bag of groceries!

The photograph at the end of this post depicts this low point in the country’s economic history far better than any words can.

The banknotes in the left-hand column show the Rh$ banknotes in circulation as at 30 June 1980, while the banknotes in the right-hand column show the Zim$ banknotes in circulation as at 30 June 2008.

The Zim$ remained demonetised until June 2019 when it was reintroduced by the Zimbabwean Government. At this time, the official exchange rate was Zim$1.00 equalled US$1.00. Since then, the Zim$ has rapidly decreased in value.

As of January 2024, the official exchange rate was US$1.00 equals Zim$6,100. However, even this shocking rate is artificial as the RBZ deliberately starves the financial markets of US dollars. This has resulted in increasing the street exchange rate of US$1.00 being equal to Zim$11,500!

It took Robert Mugabe’s Government 21 years for Zim$1.00 to fall from its value of US$1.40 in 1980 to a value of less than US$0.01 in 2001. It has taken Emmerson Mnangagwa’s Government 5 years for the relaunched Zim$1.00 to fall from its value of US$1.00 in 2019 to its current value of less than US$0.01!!

From an inflation point of view, the Zim Government claims the annual inflation rate is around 26.5%. However, respected economists are suggesting the real rate is in the hundreds of per cent.

It is hard to imagine how the ordinary Zimbabwean, working on a modest salary, is managing to survive in the midst of this surging inflation. Businesses, too, will be buckling at the knees. As for the hundreds of thousands of unemployed persons, they have simply given up all hope.

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