Trying Times For The Zimbabwean Currency

You only have to take a look at the currency exchange rates on your currency converter in recent weeks to get an idea of what is going on.  Let’s put the currency up against the US dollar, for example.

On New Year’s Day this year, the official exchange rate for these two currencies was 926165.172 Zimbabwean dollars for every US dollar.  That’s nearly a million dollars to one – a ridiculous exchange rate by any standard.  And figures collated from the rest of January show what a dire situation there is.  It went from 925823.074 on the 8th to 8.8803 on the 9th.  That then went to a high point of 41.400 on the 28th, before dipping to 0.7620 the very next day.  This speaks of a currency that is well out of control, and it has led to awful occurrences in the country itself.

So how is Zimbabwe coping with such a bad currency situation?

Well, many people don’t realize that the Zimbabwean dollar is pretty much persona non grata at the moment.  The government actually came out with a potential ‘solution’ to the problem recently – which turned out to be a one trillion dollar note.  Needless to say that wasn’t well received by anyone.

So what has led to this situation?

Quite simply, inflation is the problem.  Or more specifically, runaway inflation that is completely out of control.  It’s so bad that it is completely unprecedented; no country has ever suffered inflation to this extent in such a short time before.

The solution at present is to allow people to trade and use other currencies instead of the Zimbabwean dollar.  Unfortunately the effects of hyperinflation which is this bad are not able to be erased overnight.  Hyperinflation can take a matter of months to really get out of control, but the effects are generally felt for a long time afterwards.

One of the main problems is that the wages for many jobs in the country are now essentially worth nothing.  This has led to people in essential jobs – such as teaching for example – to desert their posts and try to earn money in other ways.  One example given was that the cost to get to work each day was sixty times the monthly amount that a teacher was now paid.

This makes the situation easier to understand for us.  Let’s say for example that you are paid $2000 a month to do your job.  Can you imagine having to pay $120,000 a DAY to get to and from work?  You can see why so many people are either on strike or trying to find other ways to earn a living.

So what does the future hold for Zimbabwe?

Well the country has many other problems besides its currency woes.  But there is no doubt that the inflation it is experiencing is adding to the problems being felt elsewhere.  And while the Zimbabwean dollar does still exist, it isn’t being used by many of its citizens any more.  Currencies other than the US dollar are being used too, on a daily basis.

So does this mean we might see the end of the Zimbabwean dollar eventually?  Could the country adopt the use of the American dollar, or perhaps another currency, and get rid of their own entirely?

At the moment it seems unlikely.  It will be interesting to see how the situation develops though, as the weeks wear on and the country struggles to get to grips with what is going on.

You can read more about the abandoning of the currency on the BBC website, here.  But it will be worth exploring the news on a regular basis from now on too, because things will certainly continue to develop on this story. 

Unfortunately the situation with the government in Zimbabwe isn’t straightforward either.  And there is no doubt that this isn’t helping the situation.  It would seem that there is no short term cure for the abandoned currency – and there could be a long wait before anyone is able to teach for a respectable wage again.

Could this mean that essential services such as education and many others will suffer and drag the country down still further?  It’s a horrifying thought, but one that seems to be coming steadily true.