Zimbabweans fear inflation with introduction of new banknote – Quartz Africa
This week, the Zimbabwean central bank introduced a $ 50 banknote, the country’s highest denomination since the return of the Zimbabwean dollar (ZW $) as the main currency in 2019. It joins other denominations that have been eroded by the ‘hyperinflation, which climbed to 800% in 2020 before slow down to 106% this year. The release of this new note stirs fears of hyperinflation reminiscent of the 2008 era.
The ZW $ 50 note, valued at $ 0.60 off the going bank rate, should do little to stop rising inflation, stabilize prices, or improve the economic outlook for the country. Zimbabwe. Previous injections of the ZW $ 10 and ZW $ 20 bills have failed to ensure economic stability, which is largely the result of political inconsistencies, especially with regard to the currency.
In A declaration, Reserve Bank of Zimbabwe (RBZ) says: âThe Bank will release ZW $ 360 million through normal banking channels and banks are expected to fund their respective accounts held at the Reserve Bank and collect the cash from July 7, 2021 . “
Economist John Robertson told Quartz that the introduction of the ZW $ 50 note would do little to improve the economy. âIt won’t change anything. The denomination is too small, we needed something of value. You will need a full charge to buy something substantial. We are on the wrong track. We should have gone for higher denominations.
Robertson called for policy changes to curb the rising cost of living and slow inflation.
âThe costs keep going up, let’s talk about electricity, goods and services. The government must ensure policy coherence, âhe said.
The Covid-19 pandemic has plunged nearly half of Zimbabweans into extreme poverty
Economic fortunes have deteriorated during the Covid-19 pandemic which the World Bank says plunged 7.9 million Zimbabweans into extreme poverty. This represents almost 50% of the population. To buy a loaf of bread, Zimbabweans struggling with price increases will need two of the ZW $ 50 bills. Since most goods are valued in US dollars, most Zimbabweans are forced to change local currency on the black market.
Economist Christopher Mugaga has been optimistic about the introduction of the new name, doubting it will trigger inflationary pressures. In the past, authorities have been criticized for printing larger banknotes, evoking memories of Zimbabwe’s hyperinflationary era, when there were ZW 100,000 billion denominations in circulation.
âIt will not have ramifications because it is not printing money. The problem will only arise where there is the impression of money. The government only maintains 15% of the money supply, âMugaga said.
Zimbabwe’s central bank has set standard levels of liquidity relative to the total money supply, which vary between 10% and 15%.
Popular journalist Hopewell Chin’ono and other citizens have taken to Twitter to voice their grievances.
Given the country’s troubled past with currency fluctuations and hyperinflation, Zimbabweans are understandably skeptical of the new note.
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