The Zimbabwe dollar has lost value by 564% to date since it was introduced in February this year.
A financial expert, Persistence Gwanyanya, is of the view that the currency depreciation is attributable to unsustainable subsidies and distorted exchange rate prior to the liberalisation of the exchange rate. He said:
It seems we underestimated the depth of our challenges, ostensibly because we suppressed the economy for too long, through unsustainable subsidies, including currency subsidies — exchange rate parity (1:1) and managed foreign currency allocation system.
All these are stop-gap measures, short-term fixes and half-baked solutions, which, ironically, got us nowhere, but deeper into the hole.
In February, the government designated electronic money as local currency and called it the RTGS dollar. The currency was liberalised and started to trade at US$1: ZWL$2.50.
In June the government abandoned the multicurrency system and reintroduced the Zimbabwe Dollar as the sole legal tender. The current exchange rate is at US$1: $16,60 on the official interbank market while on the parallel market it is US$1:22.