The first Zimbabwean dollar was introduced in 1980 and replaced the Rhodesian dollar at par. The initial ISO 4217 code was ZWD. At the time of its introduction, the Zimbabwean dollar was worth more than the U.S. dollar, with ZWD 1 = USD 1.47. However, the currency's value eroded rapidly over the years. On 26 July 2006, the parallel market value of the Zimbabwean dollar fell to one million to the British pound.
In October 2005, the head of the Reserve Bank of Zimbabwe, Dr. Gideon Gono, announced "Zimbabwe will have a new currency next year." New banknotes and coins were to replace the then current Zimbabwean dollar. Gono did not provide a name for this new currency. In June 2006, Deputy Finance Minister David Chapfika stated that Zimbabwe had to achieve macroeconomic stability (i.e., double digit inflation) before any new currency was introduced.
The dollar was redenominated on 1 August 2006 at the rate of 1 revalued dollar = 1,000 old dollars. The new dollar is subdivided into 100 cents, although cents are not used in practice. Together with the redenomination, the government devalued the dollar by 60 percent vs. the US dollar (see exchange rate history table below), from 101,000 old dollars (101 revalued) to 250 revalued dollars. ISO originally assigned a new currency code of ZWN to this redenominated currency, but the Reserve Bank of Zimbabwe could not deal with a currency change. Therefore the currency code remains 'ZWD'. The revaluation campaign, which Gideon Gono named "Operation Sunrise" was completed on 21 August 2006. It was estimated that some ten trillion old Zimbabwe dollars (22% of the money supply) were not redeemed during this period.
On 12 December 2006, Dr. Gono hinted in a memorandum to banks and other financial institutions that he would lay out the next phase of his monetary reforms dubbed Project Sunrise Two when he announced the monetary policy review statement in January 2007. It was not possible to get immediate confirmation from Gono's office whether the memorandum was advice to banks that he would be launching the new currency in January. But the chief executive officer of one of the country's largest banks said industry players had understood the governor's memo to mean new money would be introduced next month. A possible name appeared to be "ivhu", which means "soil" in Shona.
The following year, on 2 February 2007, the RBZ revealed that a new (third) dollar would be released "soon" and gave some details of the new banknotes (see below). However, with inflation at the time still in the four digits, the banknotes remained in storage. During the same month, the Reserve Bank of Zimbabwe declared inflation "illegal", outlawing any raise in prices on certain commodities between 1 March and 30 June 2007. Officials have arrested executives of some Zimbabwean companies for increasing prices on their products. Economists generally suspect that such measures will be ineffective at eliminating the problem in the long term.
Economist Eddie Cross reported on 15 June 2007 that "There is talk that the Reserve Bank will cut another three zeros off our currency next week and this would mean that one Zimbabwe dollar would now equal one million of the "old" dollars. Chaos reigns in commerce and industry and those in the public sector are frantic."
The Zimbabwe dollar was again devalued on 6 September 2007, this time by 92%, to give an official exchange rate of ZW$30,000 to US$1, although the black market exchange rate was estimated to be ZW$600,000 to US$1.
Meanwhile the WM/Reuters company introduced a notional exchange rate (ISO ZWD) which more accurately reflected black market exchange rates. Since there was a shortage of foreign exchange in the country the official rate was nearly impossible to obtain. The method of calculation was based on Purchasing Power Parity utilizing the dual listing of companies on the Harare (ZH) and London Stock exchanges (LN).
Reserve bank governor Gideon Gono announced on 30 July 2008 that the Zimbabwean dollar would be redenominated. Effective August 1, 2008, ZW$10 billion would be worth ZW$1; the new currency code was ZWR. The planned denominations to be issued are coins valued Z$5, Z$10 and Z$25 and banknotes worth Z$5, Z$10, Z$20, Z$100 and Z$500. While the German firm of Giesecke & Devrient is no longer printing Zimbabwean currency, The Daily Telegraph reported that the new currency was printed before the relationship was severed and has been kept in storage since then.
Due to frequent cash shortages and the worthless Zimbabwean dollar, foreign currency was effectively legalised as a de facto currency on 13 September 2008 via a special program to officially license a number of retailers to accept foreign money. This reflected the reality of the dollarization of the economy, with many shop keepers refusing to accept Zimbabwe dollars and requesting U.S. dollars or South African rand instead. Despite redenomination, the RBZ has been forced to print banknotes of ever higher values to keep up with surging inflation, with ten zeros reappearing by the end of 2008 (see below).
As of the 29th January 2009 all Zimbabweans are to be allowed to conduct business in any currency.
On February 2, 2009, the RBZ announced that a further 12 zeros were to be taken off the currency, with 1,000,000,000,000 (third) Zimbabwe dollars being exchanged for 1 new (fourth) dollar. New banknotes are to be introduced with a face value of Z$1, Z$5, Z$10, Z$20, Z$50, Z$100 and Z$500. The banknotes of the fourth dollar are to circulate alongside the third dollar, which will remain legal tender until 30 June 2009.The new currency code was ZWL.
The Zimbabwean dollar is now largely irrelevant with the economy being almost completely dollarised.
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Zimbabwean inflation rates (official) since independence
Date Rate Date Rate Date Rate Date Rate Date Rate Date Rate
1980 7%, 1981 14%, 1982 15%, 1983 19%, 1984 10%, 1985 10%,
1986 15%, 1987 10%, 1988 8%, 1989 14%, 1990 17%, 1991 48%,
1992 40%, 1993 20%, 1994 25%, 1995 28%, 1996 16%, 1997 20%,
1998 48%, 1999 56.9%, 2000 55.22%, 2001 112.1%, 2002 198.93%, 2003 598.75%,
2004 132.75%, 2005 585.84%, 2006 1,281.11%, 2007 66,212.3%, 2008 231,000,000% (July).
Rampant inflation and the collapse of the economy have severely devalued the currency, with many organizations using the US dollar, the euro, the pound sterling, the South African rand, or the Botswana pula instead. Early in the 21st century, Zimbabwe started to experience hyperinflation. Inflation reached 623% in January 2004, then fell back to low triple digits in 2004 before surging to 1,281.1% in 2006.
Inflation reached another record high of 3714% (year-on-year) in April 2007. The monthly rate for April 2007 exceeded 100%, implying that inflation may soon exceed all forecasts, as 100% monthly inflation over sustained 12 months would produce annual inflation of over 400,000%. Mid-year inflation for 2007 has been breaching records as inflation for May 2007 was estimated at 4,530% (year-on-year).
On 21 June 2007, the United States ambassador to Zimbabwe, Christopher Dell, told The Guardian newspaper that inflation could reach 1.5 million percent by the end of the year. The unofficial inflation rate at that time was above 11,000%, and the black-market exchange rate was Z$400,000 to the pound.
On 13 July 2007, the Zimbabwean government said it had temporarily stopped publishing (official) inflation figures, a move that observers said was meant to draw attention away from "runaway inflation which has come to symbolise the country's unprecedented economic meltdown."
On 27 July 2007, the Consumer Council of Zimbabwe (CCZ) said its recent calculations for the monthly expenditure for an urban family of six showed that inflation for the month of June was more than 13,000%. The Central Statistical Office (CSO), the official source of Consumer Price Index numbers, had not released its figures since February (2007) when it reported annual inflation at 1,729%.
In September 2007, the Central Statistical Office announced an official inflation rate of 6,592.8% for August 2007. Private estimates were as high as 20,000%. In October 2007, they announced an official inflation rate of 7,892.1% for September 2007. In November 2007, they announced an official inflation rate of 14,840.5% for October 2007.
Official, black market, and OMIR exchange rates Jan 1, 2001 to Feb 2, 2009. Note the logarithmic scale.
Main article: Hyperinflation in Zimbabwe
On 27 November 2007, the chief statistician of the Central Statistical Office, Moffat Nyoni, announced that it would be impossible to calculate the inflation rate of the dollar any further. This was due to the lack of availability of basic goods, and subsequent lack of information from which to calculate the inflation rate; plus, most computers had an insufficient number of digits and software. The International Monetary Fund has stated that inflation is predicted to rise to 100,000% per annum.
On 14 February 2008, the Central Statistical Office announced that the inflation rate for December 2007 was 66,212.3%, and the unofficial exchange rate was Z$7.1 million to the US$1.
On 20 February 2008, the Central Statistical Office said that officially, inflation has in January 2008 gone past the 100,000% mark to 100,580.2%.
On 4 April 2008, the Financial Gazette (FinGaz) reported that officially, inflation in February 2008 jumped to 164,900.3%.
On 15 May 2008, the Zimbabwe Independent reported that officially, inflation in March 2008 jumped to 355,000%.
On 21 May 2008, SW Radio Africa reported that, according to an independent financial assessment inflation in May 2008 jumped to 1,063,572.6%. The state statistical service has said there are not enough goods in the shortage-stricken shops to calculate any new (official) figures.
On 26 June 2008, the Zimbabwe Independent reported that, latest figures from the Central Statistical Offices (CSO) showed that annual inflation rose by 7,336,000 percentage points to 9,030,000% by June 20 and was set to end the month at well above 10,500,000%.
The Sydney Morning Herald reported that inflation was likely to be two million percent in May 2008 and ten to fifteen million percent in June 2008, according to John Robertson, a respected Zimbabwean economist. Robertson estimated inflation in July 2008 to be forty to fifty million percent. Inflation can only be estimated because of the impossibility of following the cost of individual goods.
According to Central Statistical Office statistics, annual inflation rate rose to 231 million percent in July 2008. The month-on-month rate rose to 2,600.2%.
As predicted by the textbook quantity theory of money, this hyperinflation has been caused primarily by the Reserve Bank of Zimbabwe's choice to mushroom the money supply.
Since February 2009, following a period of hyperinflation and widespread rejection of the devalued currency, companies and individuals are permitted to transact domestic business in other currencies, such as the US dollar or the South African rand. In consequence, the Zimbabwean economy has undergone dollarization and the Zimbabwean dollar has fallen out of everyday use.
Money supply (2006–2008)
100 million Zimbabwean dollars
On 16 February 2006, the governor of the Reserve Bank of Zimbabwe, Gideon Gono, announced that the government had printed ZW$20.5 trillion in order to buy foreign currency to pay off IMF arrears. In early May 2006, Zimbabwe's government announced that they would produce another ZW$60 trillion. The additional currency was required to finance the recent 300% salary increase for soldiers and policemen and 200% increase for other civil servants. The money was not budgeted for the current fiscal year, and the government did not say where it would come from. On 29 May, Reserve Bank officials told IRIN that plans to print about ZW$60 trillion (about US$592.9 million at official rates) were briefly delayed after the government failed to secure foreign currency to buy ink and special paper for printing money.
In late August 2006, it was reported that about ZW$10 trillion old dollars (22% of the money supply) had not been exchanged for revalued dollars. These bearer cheques were demonetized.
On 27 June 2007, it was announced that central bank governor Gideon Gono had been ordered by President Robert Mugabe to print an additional ZWD$1 trillion to cater for civil servants' and soldiers' salaries that were hiked by 600% and 900% respectively.
On 28 July 2007, it was reported that Mugabe has said that Zimbabwe will go on printing money if there is not enough for underfunded municipal projects.
On 30 August 2007, it was reported that an additional ZW$3 trillion had been printed to pay for 500,000 scotch carts and 800,000 ox-drawn ploughs plus an unspecified number of cattle.
On 3 September 2007, it was reported that that the black market in Zimbabwe is once again booming despite price controls. People who previously were employed for a paltry US$11 (ZW$2 Million) a month are now able to turn as much as US$166 (ZW$30 Million) just through black market trading.
On 24 November 2007, it was reported that money supply was now $58 trillion revalued Zimbabwean dollars (ZWD) ($41 million US at parallel rates). However, Zimbabwe banks could only account for $1 to $2 trillion of those dollars, meaning that members of the public were holding $56 to $57 trillion in cash.
On 4 January 2008, it was reported that money supply had been increased by $33 trillion (to $100 trillion) revalued Zimbabwean dollars (ZWD) Further, the demonetization of the $200,000 bearer cheques was put on hold, thus increasing the money supply.
A selection of Zimbabwe Reserve Bank bearer cheques printed between July 2007 to July 2008 (now expired) that illustrate the hyperinflation rate in Zimbabwe.
The planned issue of additional banknotes (denominations of ZWD 1, 5, and 10 Million) on 18 January 2008 will increase the money supply by an unknown amount.
On 21 January 2008, it was reported, by Gideon Gono, that the money supply had been increased to ZW$170 trillion since the middle of December. Further, Gono expected it to reach $800 trillion by 28 January 2008.
On 1 March 2008, it was reported that documents obtained by The Sunday Times show the Munich company Giesecke & Devrient (G&D) was receiving more than €500,000 (£382,000) a week for delivering bank notes at the astonishing rate of Z$170 trillion a week.
"The regime is surviving by printing money," said Martin Rupiya, professor of war and security studies at the University of Zimbabwe. "At this stage there is no other way."
According to a source at the Reserve Bank of Zimbabwe, G&D was delivering 432,000 sheets of banknotes every week to Fidelity printers in Harare, where they were stamped with the denomination. Each sheet contains 40 notes and the current production is entirely in Z$10M notes. On July 1, 2008, Giesecke & Devrient decided they would no longer print bank notes for Zimbabwe, bowing to pressure from the German government.
In the Guardian, on 18 July 2008, a report on Zimbabwe's inflation, said that an egg costs ZW$50 billion (GBP 0.17, USD 0.32), and it showed adverts for prizes of Z$100 trillion in a Zimbabwean derby and ZW$1.2 quadrillion ($1,200,000,000,000,000.00: approx. GBP 2,100; USD 4,200) in a lottery. It also showed a monthly war pension currently is ZW$109 billion (GBP 0.37, USD 0.74), shops can only cash cheques if the customer writes double the amount, because the cost will go up by the time the cheque has cleared, and people can only withdraw a maximum of ZW$100 billion from cashpoints
Zimbabwe's $100 billion banknote with the number of eggs it could purchase on its release date
On 23 July 2008, an Austro-Hungarian company based in Vienna confirmed that it is providing the Reserve Bank of Zimbabwe with the licences and software required to design and print Zimbabwe currency. The company, named Jura JSP, said it would consider ending its supply of licences and software if the European Union required it to do so. Without the licences and software, the Reserve Bank of Zimbabwe may be unable to print notes in larger denominations than are already in circulation.
On 24 July 2008, the Reserve Bank of Zimbabwe announced that "appropriate measures are being put in place to address the current setbacks being faced on the currency front, as well as on financial and accounting systems. It promised that in "the next few days" it would institute changes to the minimum cash withdrawal limits and IT systems' constraints. Currently, the government limits cash withdrawals to ZW$100 billion per day, which is less than the cost of a loaf of bread. IT systems cannot handle such large numbers; the automated teller machines for one major bank give a "data overflow error" and freeze customers attempt to withdraw money with so many zeros. That same day, the Institute of Commercial Management reported that ZW$1.2 trillion is worth the same as one British pound.
From January to December 2008, the money supply growth rose from 81,143 percent to 658 billion percent.
Date 2006 (July)
Money Supply (ZWD) 45 Trillion
Date 2006 (Aug) 2006 (Sept) 2007 (Nov) 2007 (Dec) 2008
(Jan 21) 2008
(Jan 28) 2008
(March) 2008 (June) 2008 (-)
(Revalued ZWD) 45 Billion 35 Billion 58 Trillion;
67 Trillion 100 Trillion 170 Trillion 800 Trillion 25 Quadrillion more than 900 Quadrillion -
In 1980, coins were introduced in denominations of 1, 5, 10, 20, 50 cents and 1 dollar. The 1 cent coin was struck in bronze, with the others struck in cupro-nickel. In 1989, bronze-plated steel replaced bronze. A 2 dollar coin was introduced in 1997. In 2001, nickel-plated steel replaced cupro-nickel in the 10, 20 and 50 cents and 1 dollar, and a bimetallic 5 dollar coin was introduced.
Plans by the Reserve Bank of Zimbabwe, for new Z$5,000 and Z$10,000 coins were announced in June 2005. However, the coins never appeared.
All old coins were reintroduced at face value to the third dollar in Aug 2008 and new $10 and $25 coins were introduced. These coins were minted in 2003 but only issued with the redenomination.
Banknotes, traveller's cheques and bearer cheques
Main article: Banknotes of Zimbabwe
£8 worth of Zimbabwean dollars in 2003.
At independence in 1980, the Reserve Bank of Zimbabwe introduced notes in denominations of 2, 5, 10 and 20 dollars. A 50 dollar banknote was introduced in 1994, followed by 100 dollars in 1995, 500 dollars in 2001, and 1000 dollars in 2003.
In 2003, with mounting inflation, the reserve bank started issuing travelers cheques in denominations of 1000, 5000, 10,000, 20,000, 50,000 and 100,000 dollars. These were superseded later the same year by bearer cheques, initially in denominations of 5,000, 10,000 and 20,000 dollars, with cheques for 50,000 and 100,000 dollars following in 2006.
The RBZ issued new currency on 1 August 2006, with bearer cheques in denominations of 1, 5, 10 and 50 cents, 1, 10, 20, 50, 100, 500, 1000, 10,000 and 100,000 dollars. There is also a 5 dollar denomination although the note does not appear on any of the reserve bank advertisements. Bearer cheques of 5,000 dollars (dated 1 February 2007) and 50,000 (dated 1 March 2007) were issued in March 2007, followed by cheques of 200,000 (dated 1 August 2007) in August 2007. Subsequently, Gideon Gono of the RBZ announced on 19 December 2007 that new bearer cheques (Z$250,000; Z$500,000; and Z$750,000) had been produced and would be released on 20 December. Additionally, the current high value bearer cheques (Z$200,000) would be demonetized as of 01 January, 2008. However, due to ongoing problems, plans to demonetize this note were put on hold at the end of December.
At a press conference on 16 January 2008, reserve bank Governor Gono stated that "With effect from Friday (January 18), the Reserve Bank of Zimbabwe is releasing the following bearer cheques into circulation: one million dollars (officially worth about US$33/22 euros but worth about 50c at the parallel rate), five million dollars and 10 million dollars." He continued,"...daily cash withdrawals have been increased from the current Z$50 million to Z$500 million per individual." Less than a month after announcing a similar move, Gono said the new notes would provide much needed relief to consumers who often have to go shopping with sacks of cash.
The Zim Independent and Zim Online reported on 4 April 2008 that 25 million dollar and 50 million dollar bearer cheques were being issued as of 4 April. The RBZ also increased the maximum withdrawal limit for individuals to $5 billion a day. The following month, on 5 May, the reserve bank announced that 100 million dollar and 250 million dollar bearer cheques were to be issued as of 6 May. It also had decided to float the official exchange rate to counter black market speculation. A mere 10 days later, on 15 May 2008, the RBZ announced that 500 million dollar bearer cheques were to be issued as of 20 May. It was also announced that agro cheques in the amounts of 5, 25, and 50 billion dollars would be issued on the same day. All of these will be dated to expire at the end of 2008.
The Los Angeles Times reported on 14 July 2008 that a German company has stopped supplying bank note paper to Fidelity Printers & Refiners, the Zimbabwean government-owned company that prints Zimbabwean currency. Virtually incessant use of the currency-printing presses have caused many of the machines to break down, and repair parts are no longer being shipped to Zimbabwe to repair the machines.
The RBZ on 19 July 2008 announced that agro cheques in the amount of 100 billion dollars were to be issued as of 21 July.
Since the Zimbabwean dollar was revalued in August 2006, there were repeated discussions and proposals regarding a further revaluation. As early as the beginning of 2007 it appeared that a revaluation was planned with new banknote designs being commissioned. New plans were announced in October 2007 They were initially postponed until 2008 before, in November 2007, the revaluation was described as "imminent" and would remove as many as four zeros from the currency and would be called Sunrise 2. However, on 18 December 2007, it was reported that a further printing of the current Z$200,000 bearer cheques had been produced, seemingly instead of revaluing. Further new issues of bearer cheques have since taken place.
On 30 July 2008 the RBZ announced a new currency, effective 1 August 2008, removing 10 zeros from the monetary value, by "a factor of 1 to 10".. Old coins from the first dollar in the values of 10c, 20c, 50c, $1, $2, and $5 became legal tender taking the value in new currency(thus, effectively increasing their value 10 trillion-fold), with additional $10 and $25 coins introduced, and notes in the denominations of $1, $5, $10, $20, $100 and $500. The old bearer cheques and agro cheques would continue to circulate alongside the new notes until 31 December 2008, with shops displaying prices in both old and new currency.
However, the familiar cycle of printing ever higher denomination notes to keep up with inflation continued despite redenomination. A $1,000 banknote was introduced by the RBZ on 19 September 2008, and ten days later, as the unofficial exchange rate surpassed 270,000 ZWD to the US dollar, it issued new notes in the denominations of $10,000 and $20,000. A $50,000 banknote was released on 13 October 2008, followed by $100,000, $500,000, and $1,000,000 denominations announced on 3 November. The daily cash withdrawal limit was raised for individuals to Z$500,000 from Z$50,000 and for select companies it went up to $1 million. Banknotes valued at $10 million, $50 million and $100 million were issued as the withdrawal limit was increased to $100 million per week on 4 December 2008.Scarcely four days later, on 8 December, the RBZ issued a $200 million banknote, and introduced a $500 million note on 12 December, worth approximately US$8 at the time In little over half a year, the billion denomination returned, with the RBZ issuing banknotes of $1 billion, $5 billion, and $10 billion on 19 December.
Despite rampant inflation continuing into 2009 that has rendered the currency worthless and spurred increasing dollarization of the economy, the RBZ has announced yet another set of new notes, this time in denominations of $20 billion and $50 billion to be released 12 January. Stepping up another order of magnitude, the reserve bank announced the trillion denomination for the first time, unveiling banknotes valued at $10 trillion, $20 trillion, $50 trillion, and $100 trillion on 16 January. The new notes are supposed to help citizens still in formal employment to withdraw a full month's worth of salary by showing a corresponding payslip. On 2 February 2009 the central bank announced that it had revalued the currency again, this time removing 12 zeroes, causing Z$1 trillion to be reduced to Z$1.
On 2 February 2009 the dollar was revalued again, with Z$1,000,000,000,000 being reduced to Z$1. The new banknotes introduced with have face values of Z$1, Z$5, Z$10, Z$20, Z$50, Z$100 and Z$500] The banknotes of the fourth dollar are to circulate alongside the third dollar, which will remain legal tender until 30 June 2009