Zimbabwe Introduces New Currency, Angering Everyone

[yota691]

Zimbabwe’s ‘zombie money’ draws scorn BUSINESS/NEWS (/BUSINESS/NEWS) / 06 May 2016 at 12:19pm By: Brian Latham and Godfrey Marawanyika Harare ­ A new currency printed by Zimbabwe’s central bank to ease a cash shortage has drawn scorn from critics attacking it as signalling a return to the hated local dollar, abandoned seven years ago as inflation spiralled to 500 billion percent. The central bank will distribute units with face values ranging from two to 20 dollars, pegged to the US currency, Governor John Mangudya said on Wednesday, describing them as “bond notes” that add to bond coins already in circulation. Banks have limited cash withdrawals and shut down some ATMs in Zimbabwe, where residents use a mix of currencies including the greenback, yuan and South African rand. Mangudya didn’t specify how the value of the notes would be guaranteed. “It’s zombie money, made from nothing,” said Fredmore Kupirwa, who sells sodas, canned food and corn meal from his shop in Mvurwi, a town north of the capital, Harare. Kupirwa said he needs to pay some cross­border suppliers in dollars. “I must pay them in dollars, but if my customers are paying me in this stupid currency, how can I re­stock?” The central bank will also convert 40 percent of all bank deposits resulting from exports to rand, and a further 10 percent to euros, Mangudya said. Former Finance Minister Tendai Biti, who now heads the MDC ­Renewal opposition party, said Zimbabweans would reject the new currency. National disaster “It’s a cynical, disrespectful and contemptuous move that has no logic,” Biti said. “It’s the return of the Zimbabwe dollar, marking a gross admission that the regime has failed and will drag everyone down into the abyss.” The start of state ­sanctioned seizures of white ­owned commercial farms in 2000 by black subsistence farmers deprived of land during colonial rule slashed exports of crops ranging from tobacco to roses, triggering a near decade ­long recession. That caused hyperinflation and the introduction of currencies including the dollar as legal tender. As the dollar strengthened against currencies like the South African rand, imports became cheaper, causing plants in Zimbabwe to shut down and half local production. The main opposition Movement for Democratic Change predicted on Thursday that the ruling Zimbabwe African National Union Patriotic Front party would end its multi­currency system before the year is over. “Faced with this crisis, the government is likely going to completely de­dollarise by December 2016,” it said in a statement. “This will plunge Zimbabwe back into the era of hyperinflation.” ‘Ghost money’ Busisa Moyo, president of the Confederation of Zimbabwe Industries, said the notes printed by the central bank might relieve the cash shortage, but wouldn’t address the cause of the crisis. “What’s needed is to address the problem of excessive imports and the lack of foreign direct investment,” he said by phone. Kupirwa, the trader, said shoppers and businesses would struggle to have confidence in the bond notes. “They’re saying it is a US dollar, or it is worth a US dollar, but how?” he said. “A US dollar must be printed in America, not in Harare. If it is printed in Harare, it is a piece of paper, ghost money, worthless unless Obama tells me it is a proper dollar.”  

[yota691]

 

Zimbabwe Introduces New Currency, Angering Everyone

May 5, 2016 — 6:00 PM EDTUpdated on May 6, 2016 — 2:39 AM EDT     A new currency printed by Zimbabwe’s central bank to ease a cash shortage has drawn scorn from critics attacking it as signaling a return to the hated local dollar, abandoned seven years ago as inflation spiraled to 500 billion percent.

John Mangudya 

Photographer: Jekesai Njikizana/AFP/Getty Images

The central bank will distribute units with face values ranging from two to 20 dollars, pegged to the U.S. currency, Governor John Mangudya said Wednesday, describing them as “bond notes” that add to bond coins already in circulation. Banks have limited cash withdrawals and shut down some ATMs in Zimbabwe, where residents use a mix of currencies including the greenback, yuan and South African rand. Mangudya didn’t specify how the value of the notes would be guaranteed.

“It’s zombie money, made from nothing,” said Fredmore Kupirwa, who sells sodas, canned food and corn meal from his shop in Mvurwi, a town north of the capital, Harare. Kupirwa said he needs to pay some cross-border suppliers in dollars. “I must pay them in dollars, but if my customers are paying me in this stupid currency, how can I re-stock?”

 

The central bank will also convert 40 percent of all bank deposits resulting from exports to rand, and a further 10 percent to euros, Mangudya said. Former Finance Minister Tendai Biti, who now heads the MDC-Renewal opposition party, said Zimbabweans would reject the new currency.

National Disaster

“It’s a cynical, disrespectful and contemptuous move that has no logic,” Biti said. “It’s the return of the Zimbabwe dollar, marking a gross admission that the regime has failed and will drag everyone down into the abyss.”

The start of state-sanctioned seizures of white-owned commercial farms in 2000 by black subsistence farmers deprived of land during colonial rule slashed exports of crops ranging from tobacco to roses, triggering a near decade-long recession. That caused hyperinflation and the introduction of currencies including the dollar as legal tender. As the dollar strengthened against currencies like the South African rand, imports became cheaper, causing plants in Zimbabwe to shut down and half local production.

The main opposition Movement for Democratic Change predicted Thursday that the ruling Zimbabwe African National Union-Patriotic Front party would end its multi-currency system before the year is over. “Faced with this crisis, the government is likely going to completely de-dollarize by December 2016,” it said in a statement. “This will plunge Zimbabwe back into the era of hyperinflation.”

 

‘Ghost Money’

Busisa Moyo, president of the Confederation of Zimbabwe Industries, said the notes printed by the central bank might relieve the cash shortage, but wouldn’t address the cause of the crisis. “What’s needed is to address the problem of excessive imports and the lack of foreign direct investment,” he said by phone.

Kupirwa, the trader, said shoppers and businesses would struggle to have confidence in the bond notes.

“They’re saying it is a U.S. dollar, or it is worth a U.S. dollar, but how?” he said. “A U.S. dollar must be printed in America, not in Harare. If it is printed in Harare, it is a piece of paper, ghost money, worthless unless Obama tells me it is a proper dollar.”

 

[Big_J]

GD YOTA AND DV. IT HAS BEGUN!

7 hours ago, yota691 said:

“I must pay them in dollars, but if my customers are paying me in this stupid currency, how can I re-stock?”

THEY MUST KNOW SOMETHING THAT HE DOESN'T! THANKS YOTA!

[yota691]

Zimbabwe’s Own U.S. Dollar Bills  The African nation, which uses the American currency among others, ran out of physical cash. So, it’s going to print its own  Zimbabwe is running out of cash and needs to print more money—so its central bank will print a new currency pegged to the U.S. dollar. The move has led to fears that the southeast African nation will soon abandon its multicurrency system and return to the hated local currency. Zimbabwe has used the U.S. dollar since 2009 to substitute its own failed money, the Zimbabwe dollar. It also uses the South African rand, the euro, and the Chinese yuan, alongside the dollar. However, because Zimbabwe has run a trade deficit for several years, importing more than it exports, the country is literally running out of paper money. In 2015, for example, it imported $5.5 billion in goods and only exported $2.5 billion. (The country ’s economic problems are so bad it even had to sell off some of its wildlife.) That $3 billion trade deficit means the country ’s supply of physical dollars continues to decrease. Zimbabweans can’t withdraw money from the bank because there isn’t enough of it—and banks have limited withdrawals at some ATMs. To combat the shortage, Zimbabwe’s central bank will design and circulate new two-, five-, 10-, and 20-dollar “bond notes” that will be worth the equivalent of the U.S. dollar, but won’t actually be certified American currency. Those notes won’t be worthless, however. Zimbabwe’s version of the dollar will be backed by $200 million in support from the African Export-Import Bank, a Cairo-based institution that promotes trade within the continent. Zimbabwe, then, will produce $200 million worth of new bills. Among other measures announced this week to address the monetary problems: Officials have limited the amount of money that people can take out of the country to $1,000; and the central bank will convert 40 percent of all bank deposits that come from exports to the South African rand, and an additional 10 percent to euros. The dollar is used as the official currency in other countries, as well. El Salvador, the Marshall Islands, the Federated States of Micronesia, Palau and the islands of the Caribbean Netherlands—Bonaire, Sint Eustatius, and Saba—all use the dollar as their official currency. Other countries have also adopted the dollar as their currency, but issued their own coins that are valued the same as American dimes, quarters, or nickels. Panama, East Timor, and Ecuador use American paper money, alongside their own individual coins. Similarly, since 2014, Zimbabwe has designed and circulated one-, five-, 10-, and 25-cent “bond coins” that are set to the value of the U.S. dollar. The coins bear little resemblance to their American counterparts. Zimbabwe’s new paper money will be made in the same vein. Zimbabwe made the switch to the U.S. dollar in 2009 after its currency virtually had no value from over-printing and its economy collapsed following policies instituted by the government of longtime President Robert Mugabe. During that period, Zimbabwe produced 100-trillion-dollar notes. It got so bad that by the end of 2008, the inflation rate was 79.6 billion percent. By then, 1 U.S. dollar equated to 2.6 decillion (10 ) Zimbabwean dollars. Seven years later, the country isn’t facing hyperinflation, where there’s too much currency, but deflation, as there’s not enough physical cash around. “It’s an indication of the lack of confidence in the Zimbabwean Central Bank, ” says Russell Green, an international economics fellow at Rice University ’s Baker Institution. “They want to print their own money, but they know that they ’ ve gotten in trouble in the past printing their own money.” The absorption of the U.S. dollar as a country ’s own currency, or even the attachment of its currency rate to the dollar, has previously proved perilous to other countries. Argentina’s peso had a fixed exchange rate to the U.S. dollar and for a decade every one peso was equivalent to one dollar. However, after an economic depression that lasted from 1998 to 2002, which led to the fall of the government and a $95 billion default on its foreign debt, Argentina dropped the fixed exchange rate. Argentina’s central bank ran out of money during that time. “The problem that all of these countries have, whether it’s with a complete dollarization or with a pegged currency, is if they ’re running persistent trade deficits, eventually you run out of the foreign currency, ” Green says. “That’s unfortunately Zimbabwe’s case.” Keeping the dollar may not be a worthwhile option for Zimbabwe moving forward if it continues to need to print more money with the support of outside institutions. It may even have to go back to its old currency—a move many Zimbabweans fear.

[blueskyline]

Thanks Yota . I have been following Zim a we as best as I can . The Central bank has no gold in its reserve . But Fidelity Printing which is who will be printing these new notes . They also buy gold and they are a Arm of the Zimbabwe Central Bank . Very Interesting . 

[md11fr8dawg]

I have been following the Zim for awhile. I see many posts and sites that think they will become extremely wealthy when the Zim RVs. However, just recently read a couple of articles that say the old currency (bills) will be replaced by new currency (bills) and that the old bills will be worth about 40 cents per million. I do not know enough about this gamble to pull the trigger. Any comments?

[blueskyline]

Md11fr8dawg. I do not know of the rumored value amounts . What I find interesting are the articles from Mugabe that speak of backing new lower notes with gold .http://communityvoiceradio.com/robert-mugabe-to-introduce-a-new-zimbabwe-currency-to-be-backed-by-a-gold/ . Also there are articles of advice for Zimbabwe to set up a gold bank .http://www.herald.co.zw/set-up-gold-reserve-bank/. Currently these new (Bond) notes with the (bond) coins already in circulation will be backed by 200 million dollars from the AFREXIMBANK http://jpkoning.blogspot.com/2015/11/zimbabwes-new-bond-coins-and.html. As of 2014 Zimbabwe's Central Bank was in possession of only 500,000 dollars in gold coins http://uk.reuters.com/article/uk-zimbabwe-economy-reserves-idUKBREA241S820140305 . Personally I tried to figure out how could Zimbabwe back their currency in gold if their Central Bank held such a small amount of gold coins . $ 500,000 worth . What I found was The Central bank has an arm . The Fidelity Printing and Refiners http://www.fpr.co.zw/. This Branch/Arm of the Central Bank will be printing the notes And They Also Buy Gold ! In my small thinking . At some point they could transfer what gold holdings they have to the Central Bank . Which might fulfill Mugabes gold plan if it is true . One more item Fidelity Printers and Refiners bosses were in trouble with fraud .http://allafrica.com/stories/201509110583.html . As of April 2016 they are now free http://www.newzimbabwe.com/news-28871-Fraud+accused+Fidelity+Printers+bosses+freed/news.aspx.I find all of this interesting with the cash shortage in country and now the news of the release of Lower Denoms . Thanks again Yota. Always.You have inspired me to read more . I plan to keep reading the updates of Zimbabwe as it happens . One more Item . China is a supporter of Zimbabwe . They have told Zimbabwe to embrace leadership change ?http://allafrica.com/stories/201509180663.html . I took the bite and purchased a couple of notes . I feel like they are hiding something

[md11fr8dawg]

Thanks for the response Yota and Blue. Yeah I may roll the dice and buy about $50-100USD of ZIM.

[markb57]

hey blue, who sells the new notes and how do you know you're getting the new notes?

[blueskyline]

Mark . There may be a few dealers that sell it . Some of them pumpers from other sites I'm sure . You could go to E-??? and look for one of the dealers with a gold ribbon . Then click on their offer and read about the dealers history before buying . Its still no 100% guaranty the currency is perfect . But its the best research I can think of. Best of luck to us all . Zimbabwe officials claim to have trillions in gold . Lets see what they do with all the notes 

 

[blueskyline]

One more item . The earlier Zimbabwe Currency status is showing as suspended indefinately. So it is indeed a risk .But keep in mind ,Mugabe has been said to introduce lower zimbabwe notes . Lets see what they do .

Zimbabwean Dollar History

In January 2009, the Reserve Bank of Zimbabwe permitted the use of foreign currency in Zimbabwe in response to an economic decline that caused inflation levels of 5 billion percent. By April 2009, the Zimbabwe dollar was suspended indefinitely. The government has adopted a multiple currency framework which includes the Australian Dollar, Botswana Pula, British Sterling Pound, Chinese Yuan, Euro, Japanese Yen, Indian Rupee, South African Rand, and United States Dollar. For more information, read the BBC's "Zimbabwe's multi-currency confusion"....http://www.xe.com/currency/zwd-zimbabwean-dollar#additionalinfo

[blueskyline]

16 minutes ago, blueskyline said:

Mark . There may be a few dealers that sell it . Some of them pumpers from other sites I'm sure . You could go to E-??? and look for one of the dealers with a gold ribbon . Then click on their offer and read about the dealers history before buying . Its still no 100% guaranty the currency is perfect . But its the best research I can think of. Best of luck to us all . Zimbabwe officials claim to have trillions in gold . Lets see what they do with all the notes 

 

My apologies . I have yet to see the new notes Mark . I'll be looking for those too and will post if I find them