Why The Zimbabwean Dollar Is Not Stabilising?

By Clemence Mupfunya The Zimbabwean economy continue to suffer prolonged local currency instability. It is of no doubt that the second republic is failing same as the first republic to put to rest the local currency crisis. The period of 2007 and 2008 as a period of hyperinflation of the Zimbabwean dollar during this time was caused by economic mismanagement including direct efforts by the then government to conceal the true value of the currency. Hyperinflation is generally characterised by an inflation rate of more than 50% on monthly basis, rapidly erodes the value of a currency, leading to economic stagnation, price volatility and distrust of government monetary policy and authority. This led to what is called institutional deceitfulness. The suffer consequences of hyperinflation can take years to recover from and if monetary policy is not corrected appropriately, it can easily reoccur. The inflation rate in November 20008 was estimated to be at 79 600 000 000% per month. The direct cause of Zimbabwe’s hyperinflation period was monetary policy mismanagement by the then government under the administration of the late President RG Mugabe.

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