In every nation, currency serves as a method of exchange and a form of identification; however, this isn’t true for Zimbabwe.
Here’s the reason the Zimbabwean dollar is regarded as one of the least effective currencies worldwide:
It wasn’t even utilized for transactions.
Since 2009, Zimbabwe has relied on foreign currencies, abandoning its own after hyperinflation exceeding 5,000 percent rendered it nearly valueless.
To cope with hyperinflation, Zimbabwe now employs currencies such as the U.S. dollar, South African rand, British pound, Indian rupee, Japanese yen, and Chinese yuan for everyday transactions.
This approach has resulted in a deflation rate of -2.3%, as reported by the governor of Zimbabwe’s bank.
They once issued a trillion-dollar bill.
The Z$100,000,000,000,000 note, equivalent to one trillion Zimbabwean dollars, had a value of $0.40 when exchanged for U.S. dollars until April 2016.
Currently, it is being sold at elevated prices on eBay as a novelty or collector’s item.
When inflation soared to 230,000,000 percent in 2009, the central bank of the country designated the U.S. dollar as its official currency.
Poorly managed economy
The government’s rampant money printing has led to inflation, significantly reducing the currency’s value.
Zimbabwe’s economy has been affected by issues such as political instability, corruption, and unsustainable financial practices.
Reliance on imports
Zimbabwe predominantly relies on imports for essential goods.
Zimbabwe’s previous currency, the ZWL, faced significant challenges due to its low value, which fueled further devaluation as citizens sought more stable foreign currencies.
This economic struggle serves as a cautionary tale for countries reliant on imports without substantial exports.
However, in a significant development, the Reserve Bank of Zimbabwe’s manager, John Mushayavanhu, has introduced the Zimbabwe Gold (ZiG), a gold-backed currency replacing the ZWL, aiming to revitalize the nation’s economic landscape.