The Zimbabwean dollar is in trouble. It has lost most of its value. So Zimbabwe unveiled a new currency . . . for the sixth time. Will the newest bill halt the currency crisis?
Zimbabwe has one of the world’s worst performing currencies. In April, officials announced a new currency called ZiG—for Zimbabwe Gold—to replace the previous one. They insist the ZiG will succeed because it’s backed by two-and-a-half tons of gold and $100 million in cold, hard cash.
But many citizens aren’t accepting the new money. Some lost their life savings in 2009 when the inflation rate reached over five billion percent! At that time, most of the country dropped the Zimbabwean dollar and started using U.S. dollars instead.
At one point, the country issued a 100 trillion Zimbabwean dollar banknote. Eventually, the government had to briefly scrap its failing currency and allow the U.S. dollar to be used as legal tender.
Depreciation and rejection by the people have plagued local currency ever since.
Zimbabwe reintroduced a national currency in 2016. That marked the beginning of another several years of currency volatility. In 2019, the government banned all foreign currencies like the U.S dollar. Shortly after, they “unbanned” it—since few people heeded the ban. The black market also thrived, and the local currency quickly depreciated again.
Since January, the Zimbabwean dollar lost over 70% of its value. Inflation spiked at over 10 times the U.S. inflation rate. At one point, Zimbabweans needed more than 30,000 Zimbabwean dollars to equal one U.S. buck.
Today, Reserve Bank of Zimbabwe Governor John Mushayavanhu is working to correct the bad situation in his country. The ZiG announcement is the latest currency measure undertaken by Zimbabwe’s government.
Mushayavanhu set the value of the ZiG at 13.56 to one U.S. dollar. He declares he won’t print money to help Zimbabwe’s government pay bills.
“We are doing what we are doing to ensure that our local currency does not die,” asserts Mushayavanhu. He says people have three weeks to exchange the old notes for ZiGs.
However, it will be difficult for Zimbabwe’s citizens to trust the government that has mismanaged their money for decades.
And ZiG or no ZiG: Zimbabwe is still in debt to other countries—billions of dollars’ worth.
The rich rules over the poor, and the borrower is the slave of the lender. — Proverbs 22:7
Why? When governments mismanage money, ordinary people—sometimes even whole countries—suffer.
