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Zimbabwe dumps its currency

Reserve Bank of Zimbabwe said government lead by President Robert Mugabe has decided to discard its virtually worthless national currency.

In 2008, Zimbabwean dollar was ruined by hyperflation which reached 500 billion per cent. Since 2009 Zimbabwe started using foreign currencies like US Dollar and South African rand.

During the peak of the economic crises in 2008, the local had to carry plastic bags full of bank notes to buy goods of daily needs. Prices were rising twice a day.

Reserve Bank of Zimbabwe Governor John Mangudya said “From June 15, 2015, customers who held Zimbabwean dollar accounts before March 2009 can approach their banks to convert their Zimbabwean dollar balance into dollars”.

Residents have time until September to exchange their old bank notes. This process will legally end local dollars.

In 2008, RBZ printed 100 trillion Zimbabwean dollars bank notes. The RBZ said customers who still have stashes of old Zimbabwean dollar notes can walk into any bank and get $1 for every 250 trillion they hold.

This means USD $1 will cost 35, 000,000,000,000,000 Zimbabwean dollars

What is hyperflation?

Hyperflation is a situation of extremely rapid or out of control inflation. It occurs when there is a large increase in the money supply not supported by gross domestic product (GDP) growth, resulting in an imbalance in the supply and demand for the money. Left unchecked this causes prices to increase, as the currency loses its value.