By Nigel Boys
Investors who have had savings in U.S. banks with Zimbabwean dollars since before their currency was ruined by 500 billion percent hyper-inflation in 2008 heard this week that they could now exchange the almost worthless money for U.S. dollars.
However, even if they have accounts with trillions of Zimbabwean dollars, they will only be getting a few American dollars in return.
The crisis in the African country is similar to that which Germany went through in the 1920s following World War I. Germans were being paid several times a day with single denomination notes which went up to 100 trillion marks.
Zimbabweans have been using foreign currencies like the U.S. dollar and the South African rand since 2009. In a move that will mark the Zimbabwean dollar being formally taken out of circulation this week, President Robert Mugabe’s government will allow them to exchange quadrillions of local dollars for a few U.S. dollars.
The economic crisis began in 2000 when the government started a campaign violently seizing White-owned commercial farms to distribute to Black subsistence growers, according to Bloomberg. The move slashed exports of tobacco and other crops, sending inflation surging until it reached 500 billion percent before the end of the recession in 2009.
Zimbabweans wanting to buy basic goods like bread and milk were forced to carry plastic bags bulging with bank notes to pay for their purchases near the end of the recession in 2008, according to NBC News. The report continues that prices at this time rose at least twice a day.
The central bank will now offer $5 for every 175 quadrillion, or 175,000 trillion Zimbabwean dollars from June 15 to September, said Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya in an e-mailed statement from the capital, Harare.
Customers holding Zimbabwean dollar accounts before March 2009 can now exchange their balance into American dollars as of Monday, Mangudya said in a statement on Thursday.
“The decommissioning of the Zimbabwean dollar has therefore been pending and long outstanding since 2009,” Mangudya continued. “We cannot have two legal currency systems. We need therefore to safeguard the integrity of the multiple-currency system or dollarization in Zimbabwe.”
Zimbabweans will receive $1 for every 35 quadrillion dollars, or 35,000,000,000,000,000 local dollars they have in their account. Those who have saved up cash over the years may now exchange those local bank notes, the highest denomination being 100 trillion, “on a no questions asked basis” at a rate of $1 to 250 trillion Zimbabwean dollars. This only applies to notes printed prior to 2009, said Mangudya.
Holders of 100 trillion Zimbabwean bank notes, which were not enough to ride a public bus to work for a week in 2008, will receive 40 cents for every note they own. Twenty million dollars has been set aside to pay Zimbabwean dollar currency holders, according to the RBZ.