African country creates alternative to US dollar

Zimbabwe creates alternative to US dollar

Zimbabwe started minting gold coins to create an alternative to the US dollar as a store of value. The initiative thereby reduced the demand for the US currency in the African country, RIA Novosti reports.

The coin is called mosi-oa-tunya — this is how the Zimbabweans call the Victoria Falls, the largest in Africa. The value of the coin will depend on the price of gold on the world market plus a five-percent commission for production and distribution.

During the recent decades, Zimbabwe has been suffering from the instability of the national currency and its rapid depreciation. The local population naturally wants to invest in foreign currencies to keep their money savings. Thus, the demand for them has been growing, which causes the Zimbabwean dollar to depreciate even more.

The Zimbabwean dollar existed from April 15, 1981 to June 30, 2009. It was introduced instead of the previously circulating Rhodesian dollar.

  • On August 1, 2008, a denomination was carried out, when one "new" dollar was equal to 10,000,000,000 older, second dollars. (The "second dollar" appeared on August 21, 2006, when the "first dollar" was exchanged for the second one at a rate of 1,000:1).
  • On February 2, 2009, Zimbabwe redenominated its "third dollar too, at a rate of a trillion to one.
  • On April 12, 2009, the circulation of the Zimbabwean dollar in the African country was banned. Instead, the Zimbabweans started using US dollars, UK pounds sterling, as well as the currencies of neighboring African states that had a more stable economy.
  • On June 30, 2009, the Zimbabwean dollar ceased to exist by decision of the Reserve Bank of Zimbabwe.

According to official data, inflation for the year reached 231 million percent (as of July 2008). In October 2008, prices would double every 24.7 hours. For example, a can of beer on July 4, 2008 at 17:00 local time cost 100 billion Zimbabwean dollars, but an hour later it became worth 150 billion.

As of June 2019, the Central Bank of Zimbabwe announced the resumption of the Zimbabwean dollar circulation. By October 11, 2019, the rate reached 361 Zimbabwean dollars per one US dollar.

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Author`s name Editorial Team
Editor Dmitry Sudakov