Wednesday, July 30, 2008
Two sure signs that a currency is in trouble are when it comes with an expiration date and then the government starts lopping off zeros - lots of zeros.
Earlier today, the BBC reported another bold step in the Zimbabwe government's ongoing fight against hyperinflation - striking ten zeros from the currency.
This immediately transforms a Z$10 billion bill into a Z$1 bill.
Central bank governor Gideon Gono announced the new currency will begin circulating on Friday following what is now regarded as an unsuccessful launch of a Z$100 billion note just last week.
Apparently the move was not precipitated by the absurdity of having so many zeros - that $10 billion note presumably read $100,000,000,000 - but from the impact that all the zeros were having on commerce and computers.
The high rate constrained the operations of the country's computer systems, with computers, calculators and banks' cash machines not able to handle basic transactions in billions and trillions of dollars.Inflation is even understated in Zimbabwe!
The new Z$100bn (under $2, £1) note introduced last week is not enough to buy a loaf of bread.
Inflation is officially running at more than 2,000,000%, but many analysts believe the true inflation figure is at least 9,000,000%.
A BBC reporter in Harare said that on the day he recently went shopping, a tray of 24 eggs went up from Z$375bn to Z$600bn.