So, if you haven't already heard, the Reserve Bank of Zimbabwe has once again devalued the currency, this time taking off 10 zeros. So, what was 10,000,000,000 (10Bil) now becomes 1 Zimbabwe dollar. The exchange rate to the US dollar just prior to revaluation was about 1 trillion to 1USD (using the RTGS or Bank Transfer rate). If that sounds confusing it is because it is... very confusing. Because of the cash shortages, there have been two different rates on the parallel market (aka black market). The higher rate (Bank Transfer) was in some cases 10 times higher than the cash rate (which ranged between 100Bil - 500Bil?). "Why," you ask? Well, checks take about 10 days to clear, bank transfers take over a week to be completed, sometimes as long as 2 weeks, and even if you had money in your account you were only allowed do withdraw 100Bil per day (that is 10 cents or 1 dollar, depending you which rate you use). So this means, effectively, merchants don't want checks or bank transfers, only cash... which is hard to get, hence the disparity in the rates! The only problem with this is that the prices for the goods they are selling are often based on the bank transfer rate. So, if you (using the cash rate) try to buy something at a store (based on the RTGS rate) you ending up paying 10 times what the item is actually worth, making Zimbabwe, according to recent reports, the most expensive place in the world to live! To give you an idea of what this means, a bar of soap could cost between $6 and $8! This not some luxury soap, either... we are talking about soap that smells like a monkey's butt!
Now, the new currency, at least for the moment, is nothing more than the old currency-- you just ignore the Zeros! Oh, and they are letting people use the old $5 dollar coins from before the last revaluation. Now, imagine for a moment 2.2 million percent annual inflation... using COINS!!!! (so divide by 52... that give you about 42,300% weekly inflation...in theory) So, if something costs 5 ZWD one week, it could potentially mean you would need to carry 84 coins one week later to buy the same item!!! Yep, these guys haven't got a clue!
Fortunately, the Zimbabweans have a good sence of humor-- the Reserve Bank Chairman, Gideon Gono, has been affectionately referred to as Gdn Gn, since he last removed 3 zeros from the currency. Some have said, that the currency works well as toilet paper, since it is cheaper than real toilet paper, it comes conveniently in singles, and is softer the the toilet paper you can get in the stores here.
Anyway, I guess we will see where we are at the end of the year. At the current rate of inflation, it won't be long before we have the ten zeros back again!