Historical Sketch

In 1889, the British South Africa Company (BSAC) of Cecil Rhodes was granted a concession for the exploitation of territories in south central Africa. The concession area was initially referred to as “Zambezia”, later split into Northwest and Northeast Zambezia. In 1891, the territory was extended towards the Lake Malawi, the new acquisition being called British Central Africa protectorate. The BSAC continued its conquest with the Mashonaland and Matabeleland protectorates in 1894. A year after, the different BSAC territories were reorganized and renamed into Northwest, Northeast, and Southern Rhodesia, the two northern ones being merged in 1911. The Central Africa protectorate was handed over to British colonial administration in 1907 and subsequently renamed Nyasaland. In 1953, the three colonies were joint into the Central African Federation (of Rhodesia and Nyasaland), which did not prove successful. In preparation for independence, the federation was dissolved again. Southern Rhodesia became Rhodesia after the Zambian independence in mid-1964. As the colony’s white minority rulers did not accept to handover of powers to the majority, Great Britain did not proceed to independence. In November 1965, however, Rhodesia unilaterally seceded, which triggered one and a half decades of civil war. In March 1978, Rhodesia’s government finally agreed to share powers, so that in June 1979 the transitional state of Zimbabwe-Rhodesia was created, including a nominal return to British colonial status. After the first equal elections of early 1980, Zimbabwe-Rhodesia attained independence as Republic of Zimbabwe.

Monetary History Overview

The British South Africa Company did not introduce any monetary order into its possessions, in the 1890s the correaponding legislation of the Cape Colony had been adopted globally. South African currencies circulated until in 1938, Britain established a currency board for Southern Rhodesia, creating the Southern Rhodesian Pound as distinct currency. The jurisdiction of the currency board also comprised Northern Rhodesia and Nyasaland, which thereby also separated from the South African monetary area. The common currency area was renamed when the Central African Federation was created in 1954, but the Central African Pound was identical to its predecessor. In 1964, Rhodesia withdrew from the common currency area with neighboring Malawi and Zambia. In July of the year, the Reserve Bank was established and the Rhodesian Pound became the national currency. It was at par with the Pound Sterling but repegged to the US Dollar when Great Britain devalued its currency in 1967. In 1970, Rhodesia decimalized the currency introducing the 1st Zimbabwean (Rhodesian) Dollar at half a Pound. The currency repegged to the South African Rand in December 1971. In 1980, the Republic of Zimbabwe came into being. The central bank was renamed, and new banknotes and coins replaced their predecessors during the next year. The peg to the Rand had already been abandoned under the transitional government in March 1980, and in the mid-1980s a first depreciation wave amounted to more than 60%. After a short period of currency stability, the Dollar's depreciating began again in 1988 and accelerated steadily. Until end 2002, already 98% of the value had been lost. Then in February 2003, another 93% devaluation was carried out, and the exchange rate was set to float freely. This was the beginning of a hyperinflationary surge. In August 2006, the currency was redenominated. Three zeros were cut, and the 2nd Zimbabwean (New) Dollar became the new unit. Hyperinflation continued and even accelerated further such that in August 2008, another ten zeros were cut to create the 3rd Zimbabwean (Revalued) Dollar. In January 2009, at the hyperinflationary peak, the central bank announced another redenomination of the currency, twelve more zeros were cut to create the 4th Zimbabwean Dollar. At the same time, foreign banknotes were admitted for payments, mainly the US Dollar and South African Rand, which were to be valued daily. In April 2009 finally, the Zimbabwean currency was suspended in favour of a multi-currency regime with the United States Dollar as unit of account. The suspension was made permanent in 2015, when the Zimbabwean currency was finally abolished, it had lost 22 zeros in total during the hyperinflation. In late 2014, the Reserve Bank of Zimbabwe began issuing subsidiary coins denominated in US Dollar, two years later a low-valued banknote was added, as well, to facilitate payments transactions. The so-called “bond money” (since its production was financed by government bonds) circulated alongside the US money but gradually developed into a parallel currency, which was traded at a discount against the US Dollar. In October 2018, the central bank began preparing the reintroduction of a national currency. The country’s commercial banks had to separate nostro accounts and from other holdings denominated in US Dollar, the latter being referred to as "RTGS" accounts (for "real time gross settlement"). In February 2019, the "RTGS balances" and the “Bond Money” were devalued by 60% against the US Dollar, in fact creating the 5th Zimbabwean Dollar as the national currency. The reintroduction of the Zimbabwean currency was formalized in June 2019 when, as the final step of the reform, it became sole legal tender and the multi-currency regime got abolished. The inflationary decline began immediately, 85% of the currency value were lost until mid-2020 in a managed float controlled by the central bank. In June 2020, the Dollar exchange rate was set to float freely. This led to an immediate 56% dive and a slower devaluation for another couple of months. After that depreciation went on at a high pace. In 2023 the currency auction system was replaced by a traded interbank rate but the Dollar declined further. In April 2024 a next attempt at sanitizing the monetary situation was started. The Zimbabwe Gold (ZiG) was introduced a new currency unit with a substantial gold backing to stabilize its value, and four zeros were eliminated with the conversion.

Zimbabwe joined the International Monetary Fund (IMF) on 29.09.1980.

Currency Units Timeline

Currency Institutes Timeline

Monetary History Sources