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Steve Hanke celebrates the demise of Zimbabwe's ZiG
27 Sep 2024 at 08:28hrs | Views
US-based economist and currency expert Steve Hanke has issued a stark warning about Zimbabwe's economic situation, claiming that the country's inflation rate has reached a staggering 880% per year, describing the economy as "up in flames." This alarming declaration follows the Reserve Bank of Zimbabwe's (RBZ) recent attempts to stabilize the national currency through the introduction of the Zimbabwe Gold (ZiG) currency.
In April 2024, the RBZ replaced the RTGS and Bond Notes with the ZiG, asserting that the new currency was backed by 2.5 tonnes of gold and foreign currency reserves. However, just six months later, the currency has dramatically depreciated, trading at $1
on the black market compared to an official interbank exchange rate of US$1.95.
In response to the plummeting value of the ZiG, the RBZ has unveiled a series of measures aimed at bolstering the local currency. Recent reports indicate that the central bank injected US$64 million into the Interbank Market in September alone, attempting to mop up excess ZWG liquidity and curb the spiraling exchange rates.
Further compounding the crisis, a joint research study launched by the World Bank and the Confederation of Zimbabwe Industries (CZI) revealed that Zimbabwe lost over US$3 billion between 2020 and 2023 due to poor management of its exchange rate policies.
Hanke, a prominent figure in economic circles, expressed his concerns via social media platform X, stating, "Zimbabwe's money supply (M2) is soaring at 253% per year. As night follows day, today, I accurately measure Zimbabwe's inflation at a staggering 880% per year. Zimbabwe's economy = up in flames."
The dire economic conditions have prompted Zimbabwe's largest retailers to warn of imminent shutdowns, citing severe losses resulting from the country's distorted exchange rate policies. Many businesses are struggling to survive as they grapple with the impact of hyperinflation and currency depreciation.
As Zimbabwe grapples with these overwhelming economic challenges, the government faces mounting pressure to implement effective reforms that address the root causes of inflation and restore stability to the nation's economy. The unfolding crisis raises critical questions about the effectiveness of the current monetary policies and the future viability of the Zimbabwean economy.
In April 2024, the RBZ replaced the RTGS and Bond Notes with the ZiG, asserting that the new currency was backed by 2.5 tonnes of gold and foreign currency reserves. However, just six months later, the currency has dramatically depreciated, trading at $1
on the black market compared to an official interbank exchange rate of US$1.95.
In response to the plummeting value of the ZiG, the RBZ has unveiled a series of measures aimed at bolstering the local currency. Recent reports indicate that the central bank injected US$64 million into the Interbank Market in September alone, attempting to mop up excess ZWG liquidity and curb the spiraling exchange rates.
Hanke, a prominent figure in economic circles, expressed his concerns via social media platform X, stating, "Zimbabwe's money supply (M2) is soaring at 253% per year. As night follows day, today, I accurately measure Zimbabwe's inflation at a staggering 880% per year. Zimbabwe's economy = up in flames."
The dire economic conditions have prompted Zimbabwe's largest retailers to warn of imminent shutdowns, citing severe losses resulting from the country's distorted exchange rate policies. Many businesses are struggling to survive as they grapple with the impact of hyperinflation and currency depreciation.
As Zimbabwe grapples with these overwhelming economic challenges, the government faces mounting pressure to implement effective reforms that address the root causes of inflation and restore stability to the nation's economy. The unfolding crisis raises critical questions about the effectiveness of the current monetary policies and the future viability of the Zimbabwean economy.
Source - NewZimbabwe
