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Zimbabwe removes 12 zeros from currency

  • Story Highlights
  • One trillion in Zimbabwe dollars now will be equivalent to one Zimbabwe dollar
  • Zimbabwe's inflation rate officially at 231 million percent as of last July
  • Many Zimbabwean traders have stopped accepting local currency
  • Acting finance minister recently allowed all Zimbabweans to use foreign currency
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HARARE, Zimbabwe (CNN) -- Zimbabwe slashed 12 zeros from its currency as hyperinflation continued to erode its value, the country's central bank announced Monday.

Patrick Chinamasa, Zimbabwe's acting finance minister, arrives last week at Parliament to present the '09 budget.

Patrick Chinamasa, Zimbabwe's acting finance minister, arrives last week at Parliament to present the '09 budget.

"Even in the face of current economic and political challenges confronting the economy, the Zimbabwe dollar ought to and must remain the nation's currency, so as to safeguard our national identity and sovereignty. ... Our national currency is a fundamental economic pillar of our sovereignty," said Gideon Gono, governor of the Reserve Bank of Zimbabwe.

"Accordingly, therefore, this monetary policy statement unveils yet another necessary program of revaluing our local currency, through the removal of 12 zeros with immediate effect."

The move means that 1 trillion in Zimbabwe dollars now will be equivalent to one Zimbabwe dollar.

The old notes -- with the highest being 100 trillion dollars -- not enough to buy a loaf of bread -- will remain valid until June 30, after which they will cease to be legal tender. One U.S. dollar is trading above 300 trillion Zimbabwe dollars.

This third attempt to lop off zeros comes barely six months after the Zimbabwe government last adjusted its currency as it continues to lose value.

World-record inflation estimated to be in the billions of percent -- but officially at 231 million percent as of July last year -- has quickly eroded the currency's value again and again. The highest note on the new set is 500 Zimbabwe dollars.

Many Zimbabwean traders have stopped accepting the local currency, preferring foreign currency due to the hyperinflationary environment. Last week, the country's acting finance minister, Patrick Chinamasa, allowed the use of foreign currency by everyone else.

Despite the use of foreign currency, the Zimbabwe dollars are in acute shortage, resulting in many people sleeping outside their banks hoping to get money the following day.

Regarding the cash shortages, Gono blamed Germany for dropping a contract that helped the country print money.

"The country has suffered bouts of cash shortages, which have disadvantaged both the corporate and household sectors," he said.

"As a country, we have come to terms with this stubborn reality that we were put under economic sanctions by Germany, which unilaterally cut a 50-year-old contract to supply us with currency printing paper, machinery, spare parts and inks without notice in July last year."

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