Zimbabwe

[Davros]

Afer reaching 98.7Billion Dollars to £1, on the 13th of August the Zimbabwean Dollar was revalued, and for a day traded at 15ZD to the £1..

as of the 10/9, the HMCE rate will be 64ZD to the £1...

when will inflation in this lost African state stop?!!

 

[RobM]

I have never been able to understand this. Could someone explain to me (in easy terms!) how this can occur?

 

[Pubey]

quite simply, the zimbabwian national bank printed 21trillian zimbabwian dollars to write off their IMF debts, all the extra cash in the economy deflates its value, and so wages and prices all increase. also there are asset freezes and travel freezes, along with massive rises in costs.

 

[sufcintheprem]

I think additionally, if they run at a massive trade deficit (i.e. buy in more than they sell to other countries), all the pressure comes from companies looking to sell ZD with very little reason to buy.

To compound everything, there's a snowball effect where there is no positive outlook to suggest that the currency will recover and as a result, any price offered is almost always better than what it will be in the foreseeable future.

 

[RobM]

Surely then, it means the Z$ is worth nothing. I assume then that Zimbabwe cannot import anything as they have nothing of value to pay with. Is that right? Money is only of value if people have confidence in it.
For example, if I give someone a piece of paper with £1 written on it, if they can exchange it for goods worth a real £1 then that paper really is worth £1. If nobody will accept it, then it's worth is zero. Hope that made sense!

 

[Yorkshire Blue]

Surely then, it means the Z$ is worth nothing. I assume then that Zimbabwe cannot import anything as they have nothing of value to pay with. Is that right? Money is only of value if people have confidence in it.
For example, if I give someone a piece of paper with £1 written on it, if they can exchange it for goods worth a real £1 then that paper really is worth £1. If nobody will accept it, then it's worth is zero. Hope that made sense!

Yes, that is why people in countries with unstable economies often prefer US$ than the local currency. Ecuador actually adopted the US$ as its official currency in 2000 and abandoned the Sucre. Somewhere like Cambodia the local currency is treated as the equivalent of pence (or more appropriately cents), with all but the cheapest items listed in US$.

If you have contractual debts expressed in Z$s you are laughing, although I imagine most transactions are done in either US$ or maybe for some of the smaller deals, SA Rand.

 

[Benfleet A1]

I found that in Albania. Quite probably the gayest money I have ever seen (bright orange, mauve and red) and completely worthless outside of the country. We went out there for the football some years ago and paid $30 each for tickets that were on sale for 2000 lec. It worked out that 2000 lec amounted to roughly tuppence. Didn't see that coming and the chap who got us the tickets (about 30) was seriously quids in that day.

Looking back I feel rather silly now.

 

[Shrimper2thecore]

Afer reaching 98.7Billion Dollars to £1, on the 13th of August the Zimbabwean Dollar was revalued, and for a day traded at 15ZD to the £1..

as of the 10/9, the HMCE rate will be 64ZD to the £1...

when will inflation in this lost African state stop?!!

Realistically, no time soon. However, it looks a lot better for them now than on the 13th August :p