The country’s local dollar has weakened against the US dollar every day in 2024, sending the price of a single loaf of bread from Z$6 105 to Z$19 357 in a mere 11 weeks.
Zimbabwe, the poster child of hyperinflation, is allowing a free fall in its currency that it’s no longer keen to defend and is instead working on a new exchange rate potentially backed by gold.
The indefinite postponement of the monetary-policy statement has triggered anxiety among investors, leading to speculation about whether policymakers are in agreement over how to roll out the proposed change, according to the country’s largest independent asset manager, Imara Asset Management, which oversees over $100 million.
Zimbabwe’s tendency to keep printing money means its citizens show little faith in any legal tender brought forward by the government. The US dollar accounts for 80% of all economic transactions in the country, according to the national statistics agency. Even when people want to use it, the Zimbabwe dollar can hardly buy anything. The highest denomination, the Z$100 note, must be carried in large wads to carry out the smallest of transactions.
“Money printing is a very effective tool for dealing in political favours,” Earle said. “And when inflation eventually arrives, as it always does, it can be blamed on enemies of the regime in power: the wealthy, the West, speculators, and so on.” Zimbabwe has endured a series of policy U-turns as it searched for a viable currency to call its own. Authorities abandoned the worthless local dollar and embraced the greenback in 2009. Then, they reintroduced the Zimbabwe dollar in the electronic form around 2015, pegged to the US currency. That changed in 2018, when the peg was removed, impoverishing thousands of Zimbabweans who held their savings in the electronic currency.
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