What do the U.S. dollar, South African rand, the British pound, Indian rupee, Japanese yen and Chinese yuan have in common?
They are among the currencies being used in Zimbabwe as a solution to the country’s problems with hyperinflation.
Since 2009, Zimbabwe has used other currencies in lieu of its own, which it abandoned after hyperinflation of more than 5,000 percent made it essentially worthless.
This system of using multiple currencies has led to a deflation rate of -2.3%, according to Zimbabwe’s bank governor.
“We changed to a multiple currency system to stabilize, and inflation went down to 0% and it was magic,” said the Zimbabwe Reserve Bank Governor, John Mangudya.
Zimbabwe used to have a Z$100,000,000,000,000 note – one trillion Zimbabwean dollars.
The note, along with previous hyper-inflated denominations including Z$10,000,000,000,000 (ten trillion) and Z$1,000,000,000,000 (one trillion), could be exchanged for U.S. dollars until the end of April 2016, but it was worth only about $0.40. It is fetching significant higher prices as a novelty item on websites such as eBay.
When inflation hit 230,000,000 percent in 2009 , the country’s reserve bank — infamous for its inability to contain sky-high hyperinflation — declared the U.S. dollar as its official currency.
From excessively high inflation to -2.3% deflation, Mangudya remembers the tough years vividly. “It was so traumatizing,” he admitted. “We didn’t have the tools to fight the monster that the economy was facing at the time.”
The country had to keep printing money. Prices would change by the minute, causing stress revolving around the fluctuations, one of the devastating effects of hyperinflation.
“It was terrible. You’d have to pay for your coffee before you drank it because if you waited the cost would rise within minutes,” said businessman Shingi Minyeza, chairman of Vinal Investments.