The Zimbabwean dollar is demonetised as the country switches fully to using the U.S. dollar as its currency.
HARARE, ZIMBABWE (JUNE 15, 2015) (REUTERS) – The Reserve Bank of Zimbabwe has demonetised the country’s currency, the Zimbabwean dollar, and on Monday (June 15) began its mission to collect the remaining old currency from Zimbabweans.
The unloved Zimbabwean dollar, ravaged by hyperinflation that peaked at 500 billion per cent in 2008, ceased to be legal tender on Friday (June 12) as the southern African country switched fully to the U.S. dollar.
The central bank says citizens have until September to exchange their remaining quadrillions of local dollars for the few greenbacks they are worth.
Economists say 90 per cent of the economy has been based on the U.S. dollar since 2009, so few people are expected to make a beeline to banks to cash in old notes.
Residents of the capital Harare agreed with the move, acknowledging that their currency was virtually worthless.
“I think it’s a good idea, so that at least as a nation we know where we stand. But our Zim dollar at the moment, it’s not there and it’s not working for us,” said one Harare resident.
“The phasing out of the Zim dollar, I cannot say is premature. There is no any other better time to do it than this,” said another.
“It really makes no difference, I mean the Zim dollar was as good as useless. Technically I don’t think it was working, so I suppose it’s just a way to formalise the whole thing,” said a third unnamed resident.
A former currency trader in the city told Reuters that most people weren’t bothering to exchange their money but were burning the old notes instead.
One seller on eBay was offering a hundred 50 trillion Zimbabwean dollar notes for $1,000.
Zimbabwe’s hyperinflation was considered by the International Monetary Fund as the worst for any country not at war, and the 100 trillion dollar Zimbabwean dollar note was the single largest known note to be printed by any central bank.
“A lot of people were quite very aggrieved as they felt they lost a lot of money after we had converted in February of 2009 into U.S. dollar terms. So, as a chamber of commerce we believe this could be a right move for the government in trying to restore sanity, not only in the financial sector but also the (inaudible) sector economy. As you know, for a nation to move forward sometimes there are issues which have to be settled and by demonetising we are taking a position to say this is the true position without lingering on uncertainty which had been defining the whole economy,” said Christopher Mugaga, the CEO of Zimbabwe’s National Chamber of Commerce.
The government has set aside $20 million to mop up Zimbabwean dollar notes and to compensate customers who had local currency bank balances before March 31, 2009.
Bank accounts with balances of up to 175 quadrillion Zimbabwean dollars – that’s 175,000,000,000,000,000 – will be paid $5.
Those with higher balances will get a rate of $1 to 35 quadrillion Zimbabwean dollars.