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Kunpeng Plan Speaking of Zimbabwe's currency problem, it is really a headache, and in 2023, the exchange rate of the new Zimbabwean dollar against the US dollar will be directly **90%.
Now, Zimbabwe** says that we may have to use ** to support the currency. **Historically stable, it sounds quite confident to use it to prop up the currency, but can it work? Can Zimbabwe's move really make their currency stand on its feet?
The bumpy nature of Zimbabwe's currency.
Zimbabwe, the currency of this country, is really brain-burning. At the beginning, in 2019, Zimbabwe** felt that it had to have its own currency, so it launched the new Zimbabwean dollar.
But who would have thought that as soon as this currency came out, it went all the way down, and it did not bring any good luck to Zimbabwe.
In 2023, the exchange rate of the new Zimbabwean dollar against the US dollar has fallen by 90%, yes, you heard it right, 90%. And, now in 2024, the decline continues, and the value has evaporated by nearly half again.
The main culprit behind this is actually the disgusting inflation.
Imagine that you go to the supermarket to buy something today, **it's fine, but the next day, when you look at it, wow, **it directly doubles several times.
This currency depreciation is too bad, everyone's cost of living is soaring directly, and the money in hand is getting less and less day by day, which is really distressing.
In Zimbabwe, 80% of all transactions in the market are settled in US dollars. This is not difficult to understand, because the exchange rate of the local currency is the same today, and tomorrow it will change again, who would dare to use it.
You go to buy something, the ** label given to you by the merchant may not have been pasted yet, and you have to tear it off and re-paste it the next day, because the exchange rate has changed again, and ** has to be adjusted.
In this case, Zimbabwe** is also difficult to ride.
This decision is painful, but it is also unavoidable, because the currency has completely lost its basic function as a currency, i.e., a store of value, a currency, and a medium of exchange.
But the problem is even greater after the abolition of the currency, after all, if a country does not have its own stable currency, the operation of the economy will be greatly affected.
Merchants and consumers alike have to rely on foreign currencies for transactions, which directly affects the country's economic sovereignty and independence.
Moreover, for ordinary people, the uncertainty of the cost of living has increased dramatically, and every transaction in economic life is full of uncertainty, which has a huge impact on people's lives.
* Coping strategies.
Zimbabwe's currency issue is really scratching people's heads, and the situation is so urgent that even Mnangagwa and his team can't sit still.
They met and decided to come up with some tricks to deal with the twin blows of currency depreciation and inflation. Everyone is guessing there, what tricks will be made this time?
In the past few days, ** suddenly said that we may have to use ** to support the currency.
That's right, it's **, that thing has been hard currency since ancient times. Many large banks like to use ** as a stable backing.
Zimbabwe's move is clearly to take advantage of the stability of the first to give a sharp medicine to the crumbling monetary system.
It's also interesting to think about it, using ** to support money is indeed uncommon in the modern economic system, but it is not unprecedented. It's just that Zimbabwe is doing this, can it really work?
It depends on how much ** they have in their hands, and if it is enough, it will naturally stabilize the currency and rebuild everyone's confidence in the new Zimbabwean dollar.
But this ** support currency, it is not so simple to say, you have to have real gold**.
Even if it is enough, how long can this strategy last?
It's good, but it's not a panacea. Zimbabwe's economic problems are not only as simple as currency depreciation, but also a series of complex problems such as backward productivity and heavy external debt.
Relying on ** to last for a while can't last a lifetime. ** It is the right way to come up with a real plan, fundamentally solve the problem of economic structure, and improve production.
However, we can't underestimate this trick.
After all, in the current situation, it is already a big step forward for Zimbabwe to stabilize the currency a little.
**Supported currencies, is it possible?
Zimbabwe's trick to support the currency with **, is this thing reliable?
Although there are precedents in history, they are indeed rare in today's globalized economic system.
*To support the currency, you have to look at how much ** reserves Zimbabwe has.
* Reserves, this is hard currency, is the existence of real gold.
If Zimbabwe** can take out a lot of ** and say, look, we have so many ** as backing, then the credibility and stability of the new Zimbabwean dollar will definitely be improved.
When people in the market look at it, oh, it turns out that there is real material, and their confidence in this currency will naturally come up.
In this way, the downward trend in the value of the new Zimbabwean dollar may be stopped, and it may even be somewhat.
But the problem is that there are too many "ifs" in this. For example, it's not set in stone, it also has its own fluctuations.
Although the fluctuation is much smaller than the currency depreciation, the fluctuation still exists.
Another example is the structure of Zimbabwe's economy and international credit, which directly affects the success of the strategy of backing the currency with **.
Zimbabwe's desire to use ** to prop up the currency is undoubtedly a bold attempt. If this trick does succeed, it will certainly be a big positive for Zimbabwe's economy.
Think about it, if the new Zimbabwean dollar can become stable through ** support, it will not only reduce inflationary pressures, but also boost the confidence of the people and the international community in the Zimbabwean economy, which is too important for economic recovery.
But we also have to be realistic, and the road to success will never be easy. Zimbabwe's economic problems cannot be solved overnight, and backing the currency with ** can only be said to be a palliative rather than a cure.
If we really want to recover the economy, we must fundamentally improve the country's productivity, optimize the economic structure, and improve the ability to improve the external world, which are not things that can be done in a short period of time.
Moreover, it depends on the reaction of the international market. After all, in this globalized economic environment, changes in any country's economic policies will be closely watched by the outside world.
If the international community is skeptical of Zimbabwe's strategy of backing the currency, the effectiveness of this strategy will be greatly reduced.
What I want to say is:Zimbabwe** is a bold strategy, but it is also fraught with challenges and uncertainties. Everyone is waiting to see if this attempt will eventually stabilize Zimbabwe's currency and economy.
But whatever the outcome, at least Zimbabwe** is actively seeking a solution, which in itself is a positive thing.
It is hoped that Zimbabwe will find a way out of its economic predicament through this adjustment of economic policies, so that the country's economy and people's lives can gradually improve, and everyone's lives will slowly return to the right track.