Skip to content Skip to sidebar Skip to footer

‘Zimdollars’ Issued for First Time in Ten Years Amidst Continued Hyperinflation

The new Zimbabwe dollar has hit the streets, with banks beginning to issue the paper currency Tuesday. The ‘Zimdollar,’ existing earlier this year as coins, e-balances, the RTGS dollar, and bond notes, was returned to in June as a replacement for the Real Time Gross Settlement (RTGS) system implemented in February. While the development represents the currency’s return after 10 years of absence, hyperinflation continues to wrack the country, and many residents are unhappy with the ‘drip feed’ issuance system of much needed cash.

Also Read: ‘Zimdollar’ Reboot: Bitcoin Fills Liquidity Gaps as New Zimbabwe Currency Flounders

A Complicated Evolution

After abandoning the Zimbabwe dollar due to hyperinflation back in 2009, the Reserve Bank of Zimbabwe (RBZ) adopted an international currency basket to stabilize the situation. From there, a RTGS (Real Time Gross Settlement) system was adopted in February this year, with the RTGS dollar set to be at 1:1 parity with the USD. As dollarization of the Zimbabwean economy meant that many residents were protecting their savings via foreign currencies at the time, the flip to RTGS was seen by some as an unethical move by the RBZ, which would pulverize the local value of these commonly held assets.

Fast forward to last June, and the RTGS is bid farewell, coupled with a new ban on local transactions in foreign currencies including USD. The Zimdollar was reinstated in digital form. It also was now meant to encompass coinage, RTGS and bond notes, effectively “swallowing” these previous systems.

‘Zimdollars’ Issued for First Time in Ten Years Amidst Continued Hyperinflation
Harare man displays newly issued two dollar banknotes. Source:

Back to Paper

Tuesday’s rollout of the new paper and coinage was preceded by reported delays and long lines of people waiting to grab their allotted shares. According to local media, the Governor of the RBZ, John Mangudya, says that the cash injection will be implemented gradually, leaving some Zimbabweans frustrated. A teacher who had withdrawn her money stated:

They are giving us 300 [~$20] dollars per week. The money does not last even a day.

Alternative means of storing and protecting value have come under pressure from the nation’s government whose president maintains that “You were not getting money from the banks, but on Monday (tomorrow) we are going to inject more money in the banks until we reach a level where you lose appetite to go and get cash from EcoCash.”

‘Zimdollars’ Issued for First Time in Ten Years Amidst Continued Hyperinflation

Mobile Payment Services, Foreign Currencies, and Bitcoin

Mobile cash services such as Ecocash have been the preferred system for many residents of the country to get their hands on hard to come by cash, resulting in premiums and reported charges of up to 50%. The government recently banned such mobile services citing the welfare of the people, only to cause a massive popular uproar, resulting in a lift on the ban just days later — albeit with new limits on transactions. Regional news outlet reports that “Latest figures by the Zimbabwean central bank show mobile money accounting for 85% in transaction volumes for the half year period to June 2019.”

With inflation still a serious factor (sitting currently at around 300%), cash still running short and issues with infrastructure and unemployment yet troubling the economy, high premiums are preferred to no money at all, as alternative means of value preservation (even if illegal or gray market in nature) continue to be sought after. A professor of business studies at the University of Zimbabwe maintains:

What it means is that we will probably have more cash around to feed the black market for currency.

Free market rates and artificially set government exchange rates often diverge significantly as Zimbabweans seek to save their hard-earned value from rampant inflation by alternative means of transacting and saving. In the past this has been done by way of foreign currencies and crypto (currently not legal for banks to process) and Zimbabwe could soon see a spike in such activity should the rollout of the new Zimdollar not be everything politicians and central bankers promise.

What are your thoughts on the new Zimbabwe dollar? Let us know in the comments section below.

Image credits: Shutterstock, fair use.

Did you know you can buy and sell BCH privately using our noncustodial, peer-to-peer Local Bitcoin Cash trading platform? The marketplace has thousands of participants from all around the world trading BCH right now. And if you need a bitcoin wallet to securely store your coins, you can download one from us here.

Graham Smith

Graham Smith is an American expat living in Japan, and the founder of Voluntary Japan—an initiative dedicated to spreading the philosophies of unschooling, individual self-ownership, and economic freedom in the land of the rising sun.

Graham Smith , 2019-11-14 06:00:24 ,

Source link

Leave a comment

NewsBlock © 2019 - 2020 All rights reserved.

NewsBlock © 2019 - 2020. All rights reserved.

While Bitcoin’s price seemingly moves without rhyme or reason — collapsing by dozens of percent and embarking on face-melting rallies on a whim — the cryptocurrency market is filled to the brim with fractals.

Related Reading: Analyst: Bitcoin Price Likely to Fall to Low-$8,000s as Chart Remains Weak

A brief aside: A fractal, in the context of technical analysis and financial markets anyway, is when an asset’s price action is seen during a different time. This form of analysis isn’t that popular, but it has proven to be somewhat valuable in analyzing Bitcoin.

One recent fractal popularized by a well-known cryptocurrency trader is implying that BTC is going to return to the low-$7,000s in the coming days.

Bitcoin Fractal Implies Retracement to Low-$7,000s

A well-known crypto trader going by “Tyler Durden” on Twitter recently posted the chart below, which shows that a Bitcoin price fractal may be playing out. The fractal has four phases: horizontal consolidation marked by one fakeout, a surge above the consolidation phase, a distribution, then a strong drop to fresh lows.

If the fractal plays out in full, BTC could reach the low-$7,000s again, potentially as low as $7,100. This would represent a 20-odd percent collapse from the current price point of $8,800.

It isn’t only a fractal that is hinting Bitcoin has the potential to visit its lows. As we reported on Saturday, Bloomberg believes that if the GTI Vera Convergence Divergence Indicator flips red, a downtrend could push the cryptocurrency back to $7,300.

Related Reading: Stephen Colbert Pokes Fun at Bitcoin in Monologue: Mainstream Gone Wrong?

Can Bulls Step In?

But again, many believe it is irrational to have such bearish interpretations of the cryptocurrency’s chart at the moment. As reported by NewsBTC earlier, Popular crypto trader Mayne recently noted that the “people waiting for $6,000” are irrational. He quipped that Bitcoin retracing and consolidating after its fourth-biggest bull move in history ($7,300 to $10,500, a 42% gain) is perfectly par for the course, but noted that it’s totally possible we can go lower from $8,800.

The medium-term technicals support this.

Trader and CoinTelegraph contributor FilbFilb found that by the end of November or start of December, the 50-week and 100-week moving averages will see a “golden cross,” which he claims is far more significant” for the Bitcoin market that other technical crosses.

Also, a Bitcoin price model created using Facebook Prophet machine learning found that the leading cryptocurrency is likely to end the year at just over $12,000. What’s notable about this model is that it called the price drop to $8,000 months in advance, and forecasted a ~$7,500 price bottom for BTC.

To put a cherry on the cryptocurrency cake, Crypto Thies observed that when Bitcoin bottomed at $7,300, it bounced decisively off the 0.618 Fibonacci Retracement of the move from $3,000 to $14,000, which correlates with the two-week volume-weighted moving average. He added that summer 2019’s consolidation was marked by Bitcoin flipping major resistances into support levels, implying that a bullish reversal and subsequent continuation is likely possible in the coming weeks.

Featured Image from Shutterstock

Nick Chong , 2019-11-10 12:00:38

Source link