Imagine being a quadrillionaire. While that might seem like a fantasy from a book or movie, it’s a truth that many in Zimbabwe were living with. However, with as glorious as that might sound, it was actually due to the hyperinflation that had taken place over the course of the last two decades. In 2009, Zimbabwe announced a plan to move away from the Zimbabwe dollar, and move to the U.S. dollar. If that sounds bizarre, it actually is more bizarre when you consider the level of inflation that was taking place in Zimbabwe to that point. It was noted that in 2008 alone, the Zimbabwean dollar inflated an insane 238 million percent.
That means for those who are now going to be taking advantage of the open exchange that the government announced yesterday, will include a rate of 35,000,000,000,000,000 Zimbabwean dollars for a single United States dollar. Some even pointed out that things got so bad that residents were taking wheelbarrows full of money to grocery stores when they were doing their weekly or monthly shopping.
The hyperinflation didn’t just destroy the value of the currency though, as officials pointed out that it also destroyed the confidence people had in the currency as a whole. The bank backed by the federal government for Zimbabwe pointed out in a statement that, “The decommissioning of the Z$ has been pending and long outstanding since 2009.” Simply put, this is not something that happened overnight. Rather, this is a reflection of something that has been in the works for many years. To this point, some have been doing business with the American dollar, but not having any national exchange set up made funding everything difficult.
The economy as a whole suffered in Zimbabwe. The World Bank pointed out that the overall reduction of the economy was to the tune of 18%, as unemployment soared, and the inflation of the local dollar equally soared – making everything worthless in the country. Generally speaking, this was the concern of any country or financial body during the recession, but even for as bad as things were in the U.S. the tale of Zimbabwe’s financial well-being is one that truly tests the limits.
Zimbabwean’s have been split though on what they will be doing with the currency, now that there is an official trade-off happening. Some residents said that they would trash it, or use it as fertilizer, while others took a more sentimental approach. One individual was quoted as pointing out that, “I am keeping them for my grandchildren to see. Plus I know I will get more for them in future because these Zimdollars are going to be in demand.” While that might seem like an optimistic point, it’s clear that using the U.S. dollar isn’t something that can go on forever. Experts have pointed out that this is only temporary, and that in the long-term, Zimbabwe is going to have to figure out how to gain confidence in a local currency again.