I'm a little late with this. The Zimbabwean government stopped printing the Zimbabwean dollar on April 12. So, it is officially dead. The government replaced it with the U.S. dollar and the South African rand. Where does this leave the Zimbabweans who have only Zimdollars, as they are called? A bus ride in Harare costs 50 U.S. cents or 3 trillion Zimdollars. People without relatives outside the country to send them hard currency are using Zimdollars as IOUs or have returned to a barter system. One woman paid a bus driver with a live chicken! President Mugabe is demanding a return to the Zimdollar even though it was his policy of just printing up money which caused the hyperinflation crisis. However, the finance minister is a member of the opposition party who joined the government as part of the power sharing agreement between Mugabe and Movement for Democratic Change. He refuses to return to the valueless local currency. Oh, by the way, there is one place where Zimdollars are doing well. The trillion Zimdollar notes are a favorite with collectors and are selling well on eBay.
What do you think? Can a country heal its financial problems by getting rid of its own currency? What can the average Zimbabwean do? Any thoughts?
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Ok, Ms. H., can you answer the question for me? Because I barely understood Econ 101 and it boggles my mind that a country would/can just print money without something to back it. It makes some sense that the finance minister insists that a currency be used which has some "real" value, but what is he using to buy the US dollars? How does he get those US dollars distributed to the citizens so they can use them and replace the barter system that they are forced to use instead?
ReplyDeleteThere is a really simple answer to that question. He doesn't buy the US dollars using anything. Mugabe probably didn't use Zimdollars as president, so converting was simple for him. And he doesn't try to distribute the dollars at all.
ReplyDeleteI have a friend at Penn who grew up in Zimbabwe and she told me that as soon as her parents got paid they would use Zimdollars to buy U.S. dollars on the black market, and they would do it the same day before the Zimdollars lost value. So I guess Zimbabweans who are more well off have been using U.S. currency for a long time, and it's people who couldnt afford the black market who are stuck now.
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