![]() ![]() In a situation of hyperinflation, like the one Zimbabwe is in, people are always going to “look for a store of value, something that is going to protect their purchasing power,” Paul said. “It means anyone with the local currency would want to convert it to foreign currency.” And he added that there has been a limited supply lately in foreign currency. “What we have noticed is that demand for foreign currency, apart from being driven by the need to import goods and services in Zimbabwe, is also viewed as a store of value,” RBZ Governor John Mangudya told the Sunday Mail in April. dollar, he said.Ĭentral bank officials in the country want the gold-backed digital currency to replace the need and demand for foreign currency. However, for most locals like Chitambara, the “Zim” dollar can be seen as a “hot potato” – once people get their hands on it, they want to immediately exchange it for the less volatile U.S. In Zimbabwe, people can now use both the new Zimbabwean dollar and the U.S. A digital token, without strong macroeconomic policies in place, cannot reduce the amount of money circulating in the economy, Chitambara said. The reason experts are skeptical of the gold-backed digital token’s prowess is because it may not be enough to stop money supply growth, which is the real problem at hand. “It's not the panacea to the challenges it’s wrestling,” Prosper Chitambara, senior research economist and policy advisor at Labour and Economic Development Research Institute of Zimbabwe (LEDRIZ) said. Researchers are not convinced that a digital token will solve the country’s currency woes. By November 2022, the annual consumer price inflation for a compressed basket of goods was at 107% in the country and in June, inflation rose to 175.8% following devaluations of the local currency. In 2009, inflation was so devastating that the country issued a new Zimbabwean dollar (ZWL), shedding twelve zeros from the earlier currency (ZWD). Zimbabwe’s struggles with hyperinflation has since been making headlines. An official at the central bank told the local Sunday Mail in April that the RBZ was issuing this digital token to try and stabilize the Zimbabwean dollar, which dramatically collapsed in 2008 setting record inflation rates at the time as high as 79,600,000,000% per month. ![]()
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