The decision by the government to abolish the multi-currency regime and re-introduce the Zimbabwean dollar as the sole legal tender has been catastrophic as the local currency’s value has tumbled against major currencies, plunging the country into hyperinflation.
Since the introduction of formal trading of what was effectively a new currency in February, the Zimdollar has depreciated to 17.52 per U.S. dollar, from 2.50. That equates to a loss in value of over 82% easily the worst performance globally, excluding hyperinflationary Venezuela.
Venezuela’s hyperinflation rate increased from 9,02 percent to 10 million percent since 2018, according to the International Monetary Fund, though it is expected to decline to back below 1 million percent due to recent moves by the country’s central bank, according to a recent IMF forecast.
Zimbabwe’s foreign-exchange scarcity has only worsened since the coup in November 2017. Such is its severity that the central bank raised interest rates to 70% on Friday, from 50%.
Official figures show that inflation has risen to over 97,8%, though renowned US economist Steve Hanke forecasts it to be hovering at more than 300%. Ironically, Treasury projects inflation to recede below 14% by year-end, tamed as it says, by the range of austerity measures currently being implemented.