With World’s Highest Inflation, Zimbabwe Is Running Out of Bank Notes

HARARE, Zimbabwe — After running out of basic foods like bread and milk, Zimbabwe is now running out of bank notes.The soaring inflation rate — the world’s highest at 15,000% — means locals are being forced use more bank notes to buy less.The largest denomination note, the Z$200,000 bill, is worth about $6.67, and the standard unit of exchange is a packet of 100, wrapped in plastic bands.Cash is in such short supply that ATM withdrawals have been limited to Z$10million (about $300) a person a day, and huge queues form outside banks every day.One waiting customer in Harare said matter-of-factly that he had been in line for six hours. Asked if there was money available, or whether any would be delivered, another said: “I don’t know.”The reserve bank governor, Gideon Gono, last week said the launch of a new currency, dubbed “Operation Sunrise II,” was imminent. But the last “Operation Sunrise,” when three zeros were knocked off prices and notes, proved a false dawn, and no one expects this time to be any different.While the situation is a goldmine for black-market currency traders, it does pose a logistical problem. Keen to remain inconspicuous, they stuff their pockets or fill their handbags with notes, while large-scale dealers, who operate from vehicles, keep boxes of notes in their car trunks, regularly exchanging blocks of notes the size and shape of bricks.“Everybody is buying and selling money to each other,” one money trader said. “Most of the guys can’t put their money in the banks because they are losing value, so they buy U.S. dollars.”He said the government itself was driving down the value of the Zimbabwean dollar with its own need for hard currency, by paying a premium on transactions just to ensure they get the currency quickly.Usually cash traded at a 20% premium to bank deposits, but with foreign exchange deals the premium could reach almost 100 percent.“The government froze the supply of cash to the banks,” he explained.It is as if Mr. Mugabe, having failed to control inflation by the imposition of neo-communist price controls, has suddenly been converted to the virtues of Thatcherite monetarism.The reality, though, is more prosaic. “They can’t print it fast enough,” said John Robertson, an independent economist in Harare, who suspects that the presses are secretly being used for soon-to-be issued Z$500,000 and Z$1million notes.The government was still driving up the money supply with cheap credit and the absence of goods to buy was fuelling inflation, he said.“These sorts of things are supposed to be very well run and carefully managed but the government here has been the principal source of indiscipline. The value of the money now is almost negligible. It’s just become such an inefficient mess because of incredible shortsightedness on the part of the government.”

With World’s Highest Inflation, Zimbabwe Is Running Out of Bank Notes

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