What Was the Zimbabwe Dollar?

The Zimbabwe dollar (ZWD) was the official currency of the Republic of Zimbabwe from 1980 to 2009. It is remembered for undergoing one of the worst periods of hyperinflation in modern history.

The ZWD is no longer minted or recognized as the official currency of Zimbabwe: A series of unsuccessful attempts to establish a st♓able currency followed the cancellation of the ZWD.

In April 2024, Zimbabwe began issuing the Zimbabwe Gold (ZiG), its latest attempt to stabilize its currency aꩵnd its inflation-plagued 🐼economy.

Understanding the Zimbabwe Dollar

The Zimbabwe dollar was comprised of 100 cents and was often presented with the symbol $ or Z$ to distinguish it from other currencies denominated in dollars.

The turbulent history of the Zimbabwe currency is aligned with the nation's deeply troubled economy. Once a major agricultural center of the region, Zimbabwe and its financial health experienced significant challenges that had severe effects on the country’s economy.

For most of the past two decades, the people of Zimbabwe endured widespread famine due to severe droughts. This led to poverty and food shortages in many parts of the nation.

History of the Zimbabwe Dollar

First introduced in 1980, the Zimbabwe dollar replaced the Rhodesian dollar at par. This valuation made it worth more than the U.S. dollar, but its value quickly fell due to 澳洲幸运5官方开奖结果体彩网:hyperinflation.

Out-of-control inflation drove the ZWD down, and at one point it was one of the least valuable currencies in the world.

The Zimbabwe dollar was redenominated in 2006, 2008, and agai🌼n in August of 2009. Nicknamed Operation Sunrise, the first ZWD revalued at 1000:1 to the second issue of the Zimbabwe dollar in 2006.

The following year the Reserve Bank of Zimbabwe declared i🐠nflation illegal and banned the raising of prices. However, inflation still ran at 1,000%.

The second revaluation began in 2008. The government started to allow some retailers to accept foreign currencies as it printed banknotes with highe♒r and higher values to keep up with inflation.

Finally, in 2009, the government announced a third revaluation with 1,000,000,000,000 third dollars exchanging for a single fourth issue dollar.

Inflation continued to devastate the economy, and theꦍ Reser🀅ve Bank continued to print more banknotes. 

Zimbabwe's Inflation History

Zimbabwe’s inflation problems started well before the official 澳洲幸运5官方开奖结果体彩网:hyperinflation period that began in ♊2007. In 1998, the African country's annual inflation rate was running at 47%. Except for a sl🧸ight decrease in 2000, it rose steadily through to the hyperinflation period.

The Zimbabwean dollar was then abandoned in favor of several foreign currencies.

Post-Independence Policy

Following its independence in 1980, Zimbabwe's government pursued relatively disciplined fiscal policies. This changed when the government decided that political support took precedence over fiscal prudence.

In the latter half of 1997, the strain on the nation's economy was fueled by a combination of payouts owed to war veterans and the commitment to acquire (with partial compensation) White-owned farms for distribution to the landless Black majority.

Numerous runs on the currency led to a depreciation of the exchange rate, which caused import prices to rise, sparking the beginning of the country’s inflation woes.

This initial 澳洲幸运5官方开奖结果体彩网:cost-push inflation was worsenಞed by the government’s decision, in 2000, to follow through with it✱s land reform initiative.

This redistribution created such upheaval that agricultural production fell dramatically in just a few years. In turn, this supply shock pushed prices higher, motivating a newly appointed central bank governor to name inflation as Zimbabwe's number one enemy in 2004.

While successful in decelerating inflation, a 澳洲幸运5官方开奖结果体彩网:tighter monetary policy put pressure on both banks and domestic producers and threatened to completely destabilize the ♑financial system and wider economy.

Zimbabwe's central bank was forced to engage in quasi-fiscal policies to mitigate the destabilizing effects of the tighter monetary policy. In turn, this undid previous anti-inflationary successes by creating a 澳洲幸运5官方开奖结果体彩网:demand-pull style of inflation that escalated into ෴hyperinflation beginning in 2007.

This hyperinflation🍰 remained active in Zimbabwe until foreign currency became accepted as a medium of exchange.

Death of the Ailing Zimbabwe Dollar

After years of hyperinflation, in 2009 the government of Zimbabwe announced the 澳洲幸运5官方开奖结果体彩网:demonetization of the ZWD. This became final in 2015. Demonetization is the process of officially removing the legal status o൲f a currency unit🐬.

𒀰Also in 20ꦚ09, the government legalized the use of foreign currencies and abandoned the use of the ZWD in April.

The Multiple Currency System

The country would gradually transition from the Zimbabwe dollar to the use of multiple currency systems over the next few years. These currencies included the Botswana pula (BWP), Indian rupee (INR), euro (EUR), U.S. dollar (USD), and South African rand (ZAR). ♍At least nine different currencies acted as legal tender in the country.

In 2015, the government announced tha♎t those who had bank accounts could exchang🥂e 35 quadrillion Zimbabwe dollars for 1 USD in those accounts.

Traders in Zimbabwe had their preferences for which 🦄currency to accept, but the U.S. dollar was the most widely accepted throughout the country. In late 2016, the government of Zimbabwe also introduced a batch of bond notes as a form of alternative currency, with a bond note having an exchange rateꦕ of 1:1 with the U.S. dollar.

The Zimbabwe RTGS Dollar

In June 2019, the Reserve Bank of Zimbabwe suspended the multiple currency system and replaced it with a new Zimbabwe dollar known as the RTGS dollar. It was based on the success of the 2016 U.S. dollar-linked notes. In 2020, however, the multiple currency system was reinstated.

According to World Bank data, Zimbabwe began to get its problems with inflation under control. However, its annual inflation rate rose again. In 2022, it was around 104% (a huge improvement from 2020's 557%).

The annual gross domestic product (GDP) growth rate was 8.5% in 2021 (an increase over 2020's -7.8%).

Zimbabwe continues to battle eꦑ𒁃xtreme inflation. As of March 2024, inflation was running at an annual rate of 55.3%.

The Zimbabwe Gold (ZiG) Currency

In April 2024, Zimbabwe introduced the Zimbabwe Gold (ZiG) currency. Backed by bullion and foreign currency reserves held by the central bank, the ZiG is Zimbabwe's latest attempt at establishing a credible currency.

According to the World Economic Forum, Zimbabweans continue to greatly prefer the stability of the U.S. dollar, which is used in an estimated 87% of local transactions.

The Bottom Line

The nation of Zimbabwe has had many official currencies and various de facto currencies thus far in the 21st century. None have achieved the🐟 stability that the nation needs to overcome its severe and ongoing inflation problems. The U.S. dollar remains the favored currency for daily use in Zimbabwe.