Zimbabwe's Hyperinflation
Zimbabwe
R.I.P. ZIMBABWE DOLLAR
by
Steve H. Hanke*
Professor of Applied Economics
The Johns Hopkins University and Senior Fellow
The Cato Institute
As I wrote on 25 June 2008, "Zimbabwe is in the late stages of a classic hyperinflation. … Inflation is galloping ahead as the supply of Zimbabwe dollars surges and the demand for them shrinks. Eventually, the currency will totally collapse as people simply refuse to accept it." In recent months, facts on the ground have validated this prognostication. The Zimbabwe dollar is dead.
Last year, I developed a hyperinflation index for Zimbabwe. The index began on 5 January 2007, a month before Zimbabwe entered the hyperinflation zone. Due to a lack of reliable data, I stopped reporting the index on 14 November 2008. This index was based on non-cash Zimbabwe dollar transactions. These had accounted for the bulk of transactions in Zimbabwe. By the end of November, however, there were virtually no non-cash Zimbabwe transactions taking place and the Zimbabwe Stock Exchange had stopped trading. The non-cash Zimbabwe dollar is, therefore, dead.
Ashes are all that is left of the Zimbabwe dollar — a remnant of paper money. During Zimbabwe's hyperinflation, foreign currencies replaced the Zimbabwe dollar in a rapid and spontaneous manner. This "dollarization" process was legalized in late January 2009. Even though the Zimbabwe paper money remnant circulates alongside foreign currencies, its real value is tiny, its use is limited, and its value against the U.S. dollar is cut in half every two days.
Zimbabwe failed to break Hungary's 1946 world record for hyperinflation. That said, Zimbabwe did race past Yugoslavia in October 2008. In consequence, Zimbabwe can now lay claim to second place in the world hyperinflation record books.
Highest Monthly Inflation Rates in History
Country Month with highest inflation rate Highest monthly inflation rate Equivalent daily inflation rate Time required for prices to
R.I.P. ZIMBABWE DOLLAR
by
Steve H. Hanke*
Professor of Applied Economics
The Johns Hopkins University and Senior Fellow
The Cato Institute
As I wrote on 25 June 2008, "Zimbabwe is in the late stages of a classic hyperinflation. … Inflation is galloping ahead as the supply of Zimbabwe dollars surges and the demand for them shrinks. Eventually, the currency will totally collapse as people simply refuse to accept it." In recent months, facts on the ground have validated this prognostication. The Zimbabwe dollar is dead.
Last year, I developed a hyperinflation index for Zimbabwe. The index began on 5 January 2007, a month before Zimbabwe entered the hyperinflation zone. Due to a lack of reliable data, I stopped reporting the index on 14 November 2008. This index was based on non-cash Zimbabwe dollar transactions. These had accounted for the bulk of transactions in Zimbabwe. By the end of November, however, there were virtually no non-cash Zimbabwe transactions taking place and the Zimbabwe Stock Exchange had stopped trading. The non-cash Zimbabwe dollar is, therefore, dead.
Ashes are all that is left of the Zimbabwe dollar — a remnant of paper money. During Zimbabwe's hyperinflation, foreign currencies replaced the Zimbabwe dollar in a rapid and spontaneous manner. This "dollarization" process was legalized in late January 2009. Even though the Zimbabwe paper money remnant circulates alongside foreign currencies, its real value is tiny, its use is limited, and its value against the U.S. dollar is cut in half every two days.
Zimbabwe failed to break Hungary's 1946 world record for hyperinflation. That said, Zimbabwe did race past Yugoslavia in October 2008. In consequence, Zimbabwe can now lay claim to second place in the world hyperinflation record books.
Highest Monthly Inflation Rates in History
Country Month with highest inflation rate Highest monthly inflation rate Equivalent daily inflation rate Time required for prices to