The (Zimbabwean) Dollar – The Point of No Return

John Lee, CFA
10 February 2009
Last week, Zimbabwe slashed 12 zeros from its currency as hyperinflation continued to erode its value, the country’s central bank announced in late January.

The government instituted price cuts to arrest inflation. As time went by, it became apparent the forced price cuts cause bare shelves in shops and many businesses closing.

“Even in the face of current economic and political challenges confronting the economy, the Zimbabwe dollar ought to and must remain the nation’s currency, so as to safeguard our national identity and sovereignty… Our national currency is a fundamental economic pillar of our sovereignty,” said Gideon Gono, governor of the Reserve Bank of Zimbabwe.

Gono has sent in the police to arrest businessmen for failing to reduce their prices. On one occasion, he personally visited shop owners in Harare to demand they lower prices. Despite these efforts, inflation in Zimbabwe remains the world’s highest.

“Accordingly, therefore, this monetary policy statement unveils yet another necessary program of revaluing our local currency, through the removal of 12 zeros with immediate effect.”

The move means that 1 trillion in Zimbabwe dollars now will be equivalent to one Zimbabwe dollar.

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