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where can I trade US dollars for Zimbabwe dollars?
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They are paying off various debts in many cases.
Here's a more thorough explanation:
http://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe
There is more to it than just printing money. They also caused havok on the financial resources of the country through "land reforms".
Good post.
So basically, the demand for Zimbabwe dollars in the rest of the world is rapidly declining because the world feels there is nothing worth buying or investing into in the country. This forces the government to print more and more Zimbabwe dollars to buy goods from other countries and pay debts to foreign creditors.
So why is the inflation occurring within Zimbabwe if all of their dollars are flowing out of it?
My mistake. My data was out of date.
Current exchange rate is actually about $500 billion : 1 USD.
Zimbabwe business and stock data
Probably because the currency isn't actually flowing out. What use is ZW$ outside of the country. It has to find its way back, if only because people need to spend it - the posession of foreign currencies in Zimbabwe is banned (unless you are authorized by the government) and will get you beaten, jailed and/or shot - even quoting a price in US$ is enough to get yourself done over.
The govt tries to pay US$ debts, by printing ZW$, and changing them - meanwhile, businesses receive incoming US$ from exports, etc. and are forced to convert to ZW$.
Well the currency has to flow out if Zimbabwe is paying foreign creditors and buying goods from other countries.
But this means that the rest of the world is obviously buying something from Zimbabwe, right? Other currencies are converted into ZW$, which end up back in their economy?
I'm confused. Above you said the currency isn't actually flowing out, but here you say the government pays US$ debts by printing ZW$ and changing them. That means they are flowing out of the country (to the US in this case), right?
I'm just trying to understand all of this.
That's what they get when they kick out all the white landowners.
"Inflation was stable until Robert Mugabe began a programme of land reforms that primarily focused on taking land from white farmers and redistributing those properties and assets to others; this in turn sent food production and revenues from export of food plummeting."
By the beginning of July 2008, official figures put the inflation rate at 355 000 percent[22] and with some independent estimates as high as 8,500,000 percent.[23] By July 4th, 2008 at 5PM, a bottle of beer cost $100 billion Zimbabwean dollars, but an hour later, the price had gone up to $150 billion; the Los Angeles Times further reported on July 15th, 2008 that the printing presses were running out of paper to print the money, and it was feared that because of human rights concerns, Germany would cut off the supply of paper and the software license for creating designs for ever higher denominations of currency.
"Inflation was stable until Robert Mugabe began a programme of land reforms that primarily focused on taking land from white farmers and redistributing those properties and assets to others; this in turn sent food production and revenues from export of food plummeting."
By the beginning of July 2008, official figures put the inflation rate at 355 000 percent[22] and with some independent estimates as high as 8,500,000 percent.[23] By July 4th, 2008 at 5PM, a bottle of beer cost $100 billion Zimbabwean dollars, but an hour later, the price had gone up to $150 billion; the Los Angeles Times further reported on July 15th, 2008 that the printing presses were running out of paper to print the money, and it was feared that because of human rights concerns, Germany would cut off the supply of paper and the software license for creating designs for ever higher denominations of currency.
thehstrybean
Diamond Member
The crazy thing: The exchange rate is 1:1.25, and Germany has one of the strongest (if not the) economies in Europe...Huge export to import ratio...
Not necessarily. The creditors want to be paid in their own currency. It's no good the Zim government sending over a bunch of ZW$. The creditors want US$. That means the govt has to find someone who wants the ZW$, but has US$.
The only people who want this are the few businesses left that can export anything. So they have to buy the ZW$, with the banks acting as intermediaries. The ZW$ doesn't actually have to leave the country - in fact, virtually none will, because it is of precisely zero value outside the country.
The problem is that even the exporters don't want the ZW$, so the price of US$ in ZW$ is going out of control. The whole currency is becoming useless, and everyone who can is trying to find alternative methods of trade. Export (and even local) businesses are increasingly wanting payment in hard currency wired to an offshore bank account. They can then get buy hard goods (oil, food, etc.) with the US$ and either import them, or pay other businesses in this bizarre offshore scheme.
However, employees need cash - so there is always some demand for ZW$.
chuckywang
Lifer
Why not just get rid of some of those zeroes. Divide everything by 1,000,000 (bills and prices) and do everything that way?
This sounds like "but this one goes to 11" bit in Spinal Tap.
This sounds like "but this one goes to 11" bit in Spinal Tap.
sciencewhiz
Diamond Member
They've already done that. The government did that officially in 2006, getting rid of 3 zeros. The article mentioned that all bank transactions will now be done minus 6 zeros.
I'm confused - do the exporting businesses of Zimbabwe want ZW$ or not? The first quote says they do, but the second one says they don't. Does the government force these businesses to exchange their US$ for the government's printed ZW$, so the government can then turn around and pay off its debts in US$?
Also, is hyperinflation really such a terrible thing? If everyone is being paid 10x as much and everything costs 10x as much, has anything really changed, other than the inconvenience of keeping track of much larger numbers?
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