Hyperinflation forces Zimbabwe to introduce Z$100-trillion currency

Hit by raging hyperinflation, Zimbabwe will soon introduce a new set of notes in denominations of 10 trillion, 20 trillion, 50 trillion and 100 trillion, caused by the financial isolation of the African country by the US, UK and the EU, that has devastated its economy, according to Zimbabwean President Robert Mugabe.

The Reserve Bank of Zimbabwe said in a statement, "In a move meant to ensure that the public has access to their money from banks, the Reserve Bank of Zimbabwe has introduced a new family of banknotes which will gradually come into circulation, starting with the 10 trillion Zimbabwe-dollar."

The bank is printing more currency as the Zimbabwe dollar is losing its value every day but these new trillion-dollar notes will only make the situation worse according to economists.

After replacing the old Rhodesian dollar, Zimbabwe first introduced the Zimbabwean dollar in 1980 and at that time the currency was stronger than the US dollar as it traded at $1.47.

The billion-dollar bills in denominations of 10, 20 and 50, which were introduced last week have become useless as these notes could not keep pace with hyperinflation.

In January 2002 the amount of currency in circulation went from 25 billion ZWD to 46,882 billion by July 2006.

In August 2006, the Zimbabwean government introduced a new currency, where one new Zimbabwe dollar was exchanged for old $1,000 thus reducing the circulation of its currency by $46.9 billion but increased its currency circulation more than 15,000 times in the next 18 months.

The current economic woes, according to the present government statement are that ''the Zimbabwe Stock Exchange (ZSE) had become the "epicentre of economic destruction" by allowing stock brokers to bid up stock values.

The statement, according to critics, is to take the blame away from the Zimbabwean government and put it onto the financial sector with the head of the Reserve Bank of Zimbabwe, Dr Gono saying "Where share prices were rising at the ridiculously bloated rates, what that effectively meant was that someone could work up with no penny at the bank, but end the day a multi-trillionnaire. The next morning, the false wealth so created would show up as high demand for cash, and all this being blamed on the central bank."

The government of Zimbabwe is faced with a multitude of economic problems after it abandoned its plans to develop a market-oriented economy. With a shortage of foreign exchange soaring inflation, and supply shortages and its involvement in the war in the Democratic Republic of the Congo  from 1998 to 2002 has viped out precious foreign exchange.

Inflation rose from an annual rate of 32 per cent in 1998 to an official estimated high of 231,000,000 per cent in July 2008, according to the country's Central Statistical Office and Zimbabwe is currently experiencing a hard currency shortage, which has led to hyperinflation in imported fuel.

The government run by Mugabe has been accused of corruption but he has repeatedly blamed the ills of his country's economy on the sanctions imposed on Zimbabwe by the EU and the US.

The EU and the US imposed sanctions against the Mugabe government after it was accused of rigging the polls in 2001 and human rights organisations such as Amnesty International and Human Rights Watch has accused the government of Zimbabwe of violating the rights to shelter, food, freedom of movement and protection of the law.

The media has been suppressed and even assaulted at times and some newspapers are operating from neighbouring South Africa.