Introducing Zimbabwe’s New $50 Bill – What’s it Worth?
The African nation of Zimbabwe has consistently flirted with hyperinflation through the years, with this term referring to instances where monetary inflation rises above 50%.
Most famously, 2008 saw Zimbabwe suffer the second most severe episode of hyperinflation since records began, as the country’s annual inflation rate reached 89.7 sextillion (10^21) percent.
A similar (albeit less serious) period of hyperinflation followed in 2018, while the nation is once again on the cusp of a fiscal crisis. Most recently, the nation’s central bank unveiled a new $50-note, but what is the actual worth of this bill and how can another period of hyperinflation be avoided?
The New $50 Note – What is it Worth?
In true dollar terms, the recently introduced $50 note (which is now Zimbabwe’s highest monetary denomination) is worth just $0.60 USD at the current exchange rate.
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Incredibly, this note is insufficient to even cover the cost of a paltry loaf of bread, with the bill’s entry into circulation having stirred memories of the intermittent hyperinflation that has gripped the country over the course of the previous 15 years or so.
While there’s some way to go before the crisis reaches the historical low from November 2008 (when a bank note with a denomination of 100-trillion dollars was introduced into circulation), there’s no doubt that concerns are rising once again amongst households and businesses alike.
According to award-winning journalist and staunch government critic Hopewll Chin’ono, the new banknote will actually be worth less than $0.35 at the unofficial black market exchange rate, with three $50 dollar bills required to buy a single, premium beer in a local supermarket.
The Ongoing Struggle to Manage Inflation in Zimbabwe
Historically, the Zimbabwean government’s struggles against hyperinflation have been underpinned by sustained macroeconomic and geopolitical instability, which continue to drive unprecedented levels of uncertainty for businesses.
This has compelled the central bank to continually introduce monetary policy measures to manage and manipulate inflation, with the underlying goal of strengthening the Zimbabwean dollar and reducing hyperinflation.
In truth, the situation has worsened in February 2019 with the reintroduction of the Zimbabwean dollar, with the subsequent 26 months or so having precipitated numerous changes to the overarching monetary policy framework.
However, the central bank continues to struggle in its attempt to lower inflation while simultaneously maintaining a limited currency reserve, and this trend shows no sign of abating anytime soon.
So, although the dollar is unlikely to experience the type of hyperinflation recorded in 2008, its trajectory will remain embarked on an upward path for the foreseeable future at least.