History of Hyperinflation in Zimbabwe. Hyperinflation occurs whenever a country's currency is created at too high of a rate. The history of Zimbabwe's hyperinflation is a lengthy one, and it revolves around a government that slowly became derailed.
Originally, the Zimbabwe dollar held high value. In fact, dating back to its origin in the 1980s, the Zimbabwe dollar held more value than the U. The early years of Zimbabwe's economy saw great growth and development. Various industries and crops were thriving, and, thus, Zimbabwe's economy had begun to thrive as well.However, the tables began to turn under the reign of President Robert Mugabe. In the early 1990s, Mugabe, with the help of the World Bank, decided to create an Economic Structural Adjustment Program. This ESAP would begin the gradual fall of Zimbabwe's currency. As a result of this readjustment, the government forced various land redistribution and land reform.
Not only would this shift in land reform contribute to the fall of the economy; many claim that Mugabe's actions were racist. Mugabe's government took away land from white farmers and redistributed it to black farmers as an act of correcting the injustices done by colonialism. What Mugabe's government did not know is that many of these black farmers were not prepared to tend to the new land, and thus many crops and industries began to plummet.
Once these various crops and industries began to fall, the rest of the domino effect began. The banking sector collapsed as soon as the farmers were not able to receive loans.
The food output rate fell by almost half of its percentage, and therefore manufacturing rates also declined. Ultimately the unemployment rate rose to a startling 80%, and the life expectancy rate dropped. All of these awful consequences affected the monetary value of Zimbabwe currency for a few different reasons.
The government did not honestly report their spending to the International Monetary Fund, so there was no record of the imminent doom facing the country. In addition to the war efforts, there were a few other causes for the eventual hyperinflation of Zimbabwe currency. Due to the corrupt government, many officials were being overpaid, and people were not confident in their government's abilities.This unfaithful feeling towards a country's government has the tendency to undermine the faith of currency. The Timeline of Zimbabwe's Currency Hyperinflation. Follow this timeline for insight into the amount of time it took for Zimbabwe's currency to crash. The very first Zimbabwean dollar is created in order to replace the Rhodesian dollar. A series of Zimbabwe bank notes are issued.
The government begins to attempt a currency reform in order to cease the inflation. The government now implements another attempt at currency reform by eliminating ten zeroes from every Zimbabwe dollar. The third Zimbabwe dollar is now worth 10 Billion old dollars-the second Zimbabwe dollar.
However, despite this new implementation, inflation continues to rise. The Reserve Bank of Zimbabwe takes over and introduces the fourth Zimbabwe dollar, which eliminates twelve zeros from old bills. Dollar and the South African rand. Zimbabwe currency is obsolete and no more in use.