Below is an email I received from a friend in Zimbabwe. I have attached all the files referenced in the email at the bottom of this post. Read it and weep for the people of Zim.
Time for an update on the Zim dollar!!
I should have sent a couple of updates in between these last two, but things continue to change at an alarming rate and the task of capturing some of the details (or highlights?) becomes more and more daunting. I thought I'd have to change the title of the e-mail, since for a while we were not billionaires any more…but seems like we are there again!
To backtrack a bit: In July 2008 we went out of the country for about 3 weeks. During that time, a $100 000 000 000 (100 billion) note was released (see attached scan). These seem to be highly sought after, being the world's highest denomination notes currently used - and one of the highest ever. (Apparently Yugoslavia once had higher…). US$100, GBP100, etc. were being offered for mint notes on e-bay, etc.
The day we arrived back in Zimbabwe from our trip, 1 August 2008, the Zim government removed 10 zeros from our currency - so the 100 billion notes were short-lived. They still continue to be legal currency, even now, but even after a few weeks, were virtually worthless.
Removing 10 zeros meant that we had to print a whole new set of notes - and we continue to print higher and higher denominations as the need arises (i.e. every 2 weeks or so!). The highest released at the beginning of August was the new $100 note (which, add 10 zeros, equated to $1 Trillion)
1 Trillion = new $100 note
500 billion = new $50 note
200 billion = new $20 note
100 billion = new $10 note
50 billion = new $5 note
10 billion = new $1 note
2 'new' coins were released, $10 and $25, both minted in 2003 and not previously circulated. (Who knows why?… but it does explain why they removed 10 zeros, not 9, in August 2008, so they could use these pretty new coins for a few weeks!!)
…then they also allowed back into circulation all the OLD coins - pre-2003, or whenever it was we previously stopped using coins. The coins retained their face value - e.g. $5 coin remained new $5 value! Whoopee! People fished out their old collections of coins (we had a small bucketful, which Katelyn and friends used to dive for in the pool) and had the use of these for a few weeks. They are still legal but couldn't buy anything after a few weeks of re-release! We kept our nicer coins for our collection and got rid of all those that were pool-tarnished.
So the old coins now had the new value (…add 10 zeros).
New $25 coin = pre-August value of $250 billion
New $10 coin = " " " $100 billion
Old $5 coin = $50 billion
Old $2 = 20 billion
$1 = $10 billion
50c = $5 billion
20c = $2 billion
10c = $1 billion
I imagine the Reserve Bank had rooms and rooms full of these old coins and knew they could buy a few weeks' worth of value before madly printing notes again. The "free" amount that people had from before would have been negligible.
For a few short weeks we were back to single and double figures in the shops - then the triple figures arrived and the marathon started all over again.
See the attached cartoon that came out in early August, when the removal of the 10 zeros was announced by the Governor of the Reserve Bank. The 10 zeros are exiting the room, waving goodbye and promising to "be back for Christmas"!!! We all laughed but knew it would be true, sadly.
Now, 2 and a half months later, we are already back to hundreds of millions - and the billions are becoming common too now. So we already have 6 or 7 of the zeros back - and still 8 weeks to Christmas! Plenty of time for the other few to come back! Watch this space!
A major problem with such inflation as this (currently officially around 230 million%) is that money cannot be printed fast enough and there is continually a severe shortage of cash. With the normal principle of "supply and demand" this has given the Zimbabwe dollar cash a much higher value than the same amount in a bank account or a cheque. The banks limit the daily withdrawal to way below what is needed, so that what is available can go round.
For example, today (21 October 2008) the Zim cash rate to the US dollars is about 30 000:1 and the cheque rate is $200 million:1. Because of this difference, most things can now be paid for in USD - some legally, to companies with a forex-trading licence - and some…not so legally! Very few people have the necessary millions (add 10 zeros - that's tens-of-quadrillions in old currency!!!) to pay for things and even if they do, they would be silly to keep it in their bank for more than a day or so as the value is plummeting by the minute.
This time last week, the rate (cheques) was Z$4 million:1USD - Today it is Z$200 million:1. We have been amazed as we watched it rise (or fall?) every day: 4mill - 7mill - 12mill - 15mill - 20mill - 40mill - 90mill - 110 mill - 200million… in one week. Sometimes it changed twice in one day.
Now put the 10 zeros back... And the three from 2003: Today's $200 million is 2 000 000 000 000 000 000 - $2 Quintillion? (July '08) and 2 000 000 000 000 000 000 000 original poor old Zim dollars (2006) = $2 Sextillion! I'm sure such numbers never even existed before! Maybe for astronomical distances and numbers!
Anyway, I'm sure by now most of you have lost track. I almost have. So some quick last points:
I was chuffed to obtain the Buddie cards (see attached scans) for $500 000 000 000 (500 billion) and $1 000 000 000 000 (1 trillion), in August. There were not many around - especially of the Trillion, as we had already dropped the zeros by then and the equivalent card of new $100 was mostly available. Buddie is our pay-as-you-go mobile recharge card. Still couldn't make many calls with the Trillion. In contrast, this week I have been buying cards for new $25 000 (= 250 trillion), which still only gives similar air time. All airtime has to be bought with cash…so the USD equivalent is /30 000.
Because of the vast difference between cash and cheque, shops/companies have a two-tier pricing system (in fact, 3-tier, as most will take USD). I saw a notice on one clothes shop window on Saturday offering a 99% discount for cash payments! They wouldn't let me take a picture!
Some utility bills are still in old currency so we have to work back 10 decimal places to find the new value for the cheque, e.g. our September City of Harare bill was: $930792965674470.09 (note the 9 cents!) (= $93 080 new value). They still take cheques - and do not have a 3-tier payment system… so the bill is the equivalent of less than 10 US cents! No wonder our rubbish has not been collected for the last 4 weeks, etc.
Just a few weeks ago we received a bill to top up our post box rental. It was $45… so I paid it with three coins - two x$10 and a $25. By then the coins were hardly in use any more so I was amazed. Can't remember the last time I paid for things in coins only!
At least with enough outlets charging in US dollars now, we can finally obtain most of the food, etc. that we need. However, retailers are really taking advantage of this and competition has not set in yet - and we are now one of the most expensive places to live. Compared to South African prices, we are 3 - 4 times as expensive, on most goods. I would be interested to hear from anyone in the US or UK on costs of some basic items…
New notes are being printed regularly - the latest, last week, was a $50,000 note. This is the daily withdrawal limit and can buy a loaf of bread or 2 Buddie re-charge cards - or 5 short taxi hops! The new $20,000 and $50,000 notes are printed on bond paper and have no security features! There are apparently already forgeries in circulation. We have been collecting a few of each new note as they come out, knowing that they won't stay around long and then will be unobtainable, especially in good condition.
There are many more amazing stories - we could write a book, I'm sure.