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Zimbabwe's New Money Deteriorates Economic Crisis
Zimbabwe's new money denominations, the 500 Zimbabwean dollar note and five Zimbabwean dollar coin, launched by President Robert Mugabe on Friday, have received mixed reactions by users because of a deepening economic crisis billed to be the worst in two decades, Zimbabwe News Agency reported on Sunday.
The 500 Zimbabwean dollar note has particularly posed problems between service providers and the paying public as people have been tendering it for purchase of even small commodities requiring a large amount of change, said the report.
Eddie Choga, an advertising executive, was quoted as saying that the new note would fuel inflation because prices of basic commodities will go up.
The five Zimbabwean dollar coin is also set to cause an inflation of commodity prices, particularly by vendors.
Governor of the Reserve Bank of Zimbabwe Leonard Tsumba said it had become necessary to have the new note which is Zimbabwe's biggest because of high inflation, citing that the inflation rate in July this year was 70.4 percent.
Tsumba said the Zimbabwean dollar was now worth only six cents compared to 1990, making the 100 Zimbabwean dollar note inconvenient to big transactions.
The Zimbabwean dollar has considerably lost its face value to hard currencies and was trading at about 300 Zimbabwean dollars to the U.S. dollar on the parallel market because of a foreign currency shortage in the country, while the official exchange rate is now 56 Zimbabwean dollars against one U.S. dollar.
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