The New Zimbabwe “Gold” Dollar
Dr. Bryan Taylor, Chief Economist, Global Financial Data
Zimbabwe has a new currency. Yes, again.
Of course, Zimbabwe has gone through more currency changes in the past 20 years than any country on the planet, although Venezuela is making an attempt to catch up.
During the 2000s, Zimbabwe suffered one of the worst inflations in history, going through four currencies in four years. On July 31, 2006, Zimbabwe introduced a new Dollar with 1000 old Zimbabwe Dollars (ZWD) equal to 1 Second Zimbabwe Dollar (ZWN). On August 1, 2008, 10 zeroes were removed with 1 Third Zimbabwe Dollar (ZWR) equal to 10 billion Second Zimbabwe Dollars. On February 2, 2009, a Fourth Zimbabwe Dollar (ZWL) was introduced, removing 12 zeroes, with 1 Fourth Zimbabwe Dollar equal to 1 trillion Third Zimbabwe Dollar. Thus 1 Fourth Zimbabwe Dollar was equal to 10 trillion trillion (10,000,000,000,000,000,000,000,000) original Zimbabwe Dollars.
On January 1, 2009, the Reserve Bank of Zimbabwe allowed U.S. Dollars to circulate freely throughout the country. The Fourth Zimbabwe Dollar remained legal tender until June 30, 2009, by which time it had lost 95% of its value in the five months of its existence. Transactions were almost exclusively in U.S. Dollars, the Zimbabwe Dollar having been abandoned. Beginning on June 15, 2015, old bank accounts in Zimbabwe Dollars were officially converted into United States Dollars at the rate of 35 quadrillion Zimbabwe Dollars to the United States Dollar.
Although the economy largely dollarized after 2015 with both U.S. Dollars and South African Rand circulating in the economy, Bond Dollar banknotes were introduced in 2016 and circulated in Zimbabwe. The Real Time Gross Settlement Dollar (RTGS Dollar) was the only official currency in Zimbabwe between June 2019 and March 2020. Prior to June 2019 and after March 2020, foreign currencies were allowed to circulate in Zimbabwe. Zimbabwe suffered inflation and the Zimbabwe Bond Dollar notes depreciated to less than one cent in U.S. Dollars by 2022.
The Fifth Zimbabwe Dollar suffered continued inflation and went from 3 ZWL to the USD in April 2019 to 30,000 ZWL to the USD in April 2024. On April 8, 2024 the ZIG (Zimbabwe Gold Dollar) currency replaced the Zimbabwe Dollar at a conversion rate of approximately 2250 ZWL equal to 1 Zig (ZWG). The value of the ZIG was fixed at 13.56 ZIG to the US Dollar. The symbol in the GFDatabase for the Zimbabwe Dollar has changed from USDZWL to USDZWG. There is already confusion in the issuance of banknotes. The Reserve Bank has cancelled the 1-, 2-, and 5-zig notes and will issue coins instead, and the Reserve Bank is holding off on issuing the 50-zig and 200-zig notes. Only the 10- and 20-zig notes have been introduced.
To encourage people in Zimbabwe that the Zimbabwe Gold Dollar won’t suffer the same fate as the previous Dollars, the Reserve Bank of Zimbabwe has put a picture of gold bars on the back of the note. Unfortunately, we predict that the ZIG will follow the fate of the previous Zimbabwe Dollar and the ZIG may soon become a new form of cigarette wrapping paper. ZIGs for cigs!
Figure 1. Back of Zimbabwe 10-Zig Note with Gold Bars
