Zimbabwean dollar

The Zimbabwean dollar (currency code ZWD) is the currency of Zimbabwe since 1980. 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.

The 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).

Inflation

Date	Rate	Date	Rate	Date	Rate	Date	Rate	Date	Rate	Date	Rate
Zimbabwean inflation rates since Independence
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	1185%

Rampant inflation and the collapse of the economy have severely devalued the currency, with many organisations using the US dollar 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 a new high of 1,193.5% in May 2006, then declining slightly to 1,184.6% in June 2006. ^* Some analysts predicted an inflation rate of 2000% for the end of that year.

Money Supply

On 16 February 2006, the governor of the Reserve Bank of Zimbabwe, Dr Gideon Gono, announced that the government had printed ZWD 21 trillion in order to buy foreign currency to pay off IMF arrears.^*

In early May 2006, Zimbabwe's government announced that they would produce another 60 trillion Zimbabwean dollars. ^*

The additional currency was required to finance the recent 300% increase in salaries for soldiers and policemen and 200% 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.

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+

This table shows in more detail the historical value of one U.S. dollar in Zimbabwean dollars:

250 (Jul); 300 (Aug); 400 (Sep); 300 (Oct); 320 (Nov); 340 (Dec)

Date	Official Rate	Free / Parallel Rate
1978	R$0.6788 (Apr)	n/a
1978 (Apr)	Note 1	R$ pegged to US$
1980	R$0.68 (Mar)	n/a
1980 (Mar)	Note 2	R$ tied to basket of FFR, DEM, ZAR, CHF, GBP, USD
1980 (Apr)	Note 3	Independence (1 Z$ = 1 R$)
1982	0.8925 to 0.9140 (Dec)	-
1982	Note 4	ZWD devalued by 16.5%
1983	0.96135 (Jan)	up to 3.18 (July)
1983 (Jan) to 1983 (Jun)	Note 5	ZWD devalued by 5%
1983 (July)	Note 6	Parallel rate highly variable - premium up to 231%
1983 (Aug) to 1993 (Dec)	Note 7	Flexible basket; dual rates; 20% tax on outgoing payments
1994	6.82 (Jan)	8.36 (Oct)
1994	Note 8	Floating official rate (July 1) ; dual rates; ZWD devalued by 17%
1994 (July 2) to 1999 (Mar 30)	Note 9	floating official rate; dual rates; rates unified 1998 (Dec)
1995	8.26 (Jan)	8.85 (Oct)
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; rates unified 1998 (Dec)
1999	36.23 (Jan)	38.30 (Sep)
1999	Note 10	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 (Jan)	56 to 62 (Jul); 65 to 70 (Aug.)
2000	Note 11	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);
2001	Note 12	In June, the official rate became a crawling peg rate.
2002	Note 13	In 2002 the parallel black market for foreign exchange mushroomed.
2002	55	380 (Jan) to 710 (Jun), 1400 (Jul) to 1740 (Oct) to 1400 (Dec)
2003	Note 14	In February 2003, the Official Exchange Rate was re-pegged at ZWD 824 per US $
2003	55 (Jan); 824 (Feb)	1400 (Jan); 1450 (Feb); 2300 (May); 3000 (Jul); 6000 (Aug); 6400 (Oct); 6000 (Nov)
2004	Note 15	In January 2004, semi-weekly (RBZ-controlled) currency auctions were set up to determine the official rate.
2004	824 (Jan 1); 4196 (Jan 12) to 5730 (Dec)	5500 (Jan 1) to 6000 (Dec)
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)	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)
2005	Note 16	In November 2005, the regular currency auctions were discontinued and the RBZ announced that "market factors" would control the exchange rate.
2005	60,000 (Nov); 84,588 (Dec 30)	90,000 (Nov); 96,000 (Dec 30)
2006	85,158 (Jan 3); 99,202 (Jan 24)	100,000 (Jan 6); 106,050 (Jan 19); 115,000 (Jan 20)
2006 (Jan)	Note 17	Economists predict an unofficial rate of nearly ZWD 250,000 to the US dollar by mid-2006.
2006 (01.25)	Note 18	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.
2006	99,202 (Jan 25); 101,195.54 (Apr 28) (click for details)	125,000 to 150,000 (Jan 25); 165,000 (Jan 31); 175,000 to 190,000 (Feb 24); 220,000 (Feb 28); 205,000 (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)^*

Coins, Banknotes, Travellers Cheques and Bearer Cheques

Proposed new currency

In late October 2005, the head of the Reserve Bank of Zimbabwe, Dr. Gideon Gono, announced that "Zimbabwe will have a new currency next year." New banknotes and coins will replace the current Zimbabwean dollar, but Gono did not give a name for this new currency. Many international observers believe the goal of a new currency was merely a campaign strategy, and will be impossible to implement due to large scale shortages of ink and banknote paper in the country. Gono stated that the new currency was conditional on inflation coming down to double digits, and barring a sudden lurch from hyperinflation to an extraordinary level of deflation, it is now a mathematical impossibility for this to occur in 2006.

Zimbabwe will only introduce a new currency, initially planned for later this year (2006), once it brings down inflation to double digit figures, Deputy Finance Minister David Chapfika said in June 2006. Chapfika told parliament in remarks broadcast on state television that the troubled country had to first achieve macro-economic stability before the new currency was introduced. "That means inflation will have to come down first," he said.

References

External links

Zimbabwe's inflation surpasses 1,000 percent, CNN, May 12, 2006
Zimbabwe sees record inflation, BBC, 10 March 2006
In Zimbabwe, a small bag of groceries now costs millions Peta Thornycroft, Telegraph, 15 July 2006

Economy of Zimbabwe

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