African securityZimbabwe’s new exchange rate: $1 for 35,000,000,000,000,000 old Zimbabwean dollars

Following nearly fifteen years of ruinous economic policies which brought the country to its knees, the government of Robert Mugabe in Zimbabwe will next week begin a three-month currency exchange program which will allow citizens to exchange “quadrillions” of local dollars for a few U.S. dollars.

The plan is part of the government decision to discard, or decommission, the country’s worthless national currency.

Zimbabwe used to be called the “breadbasket of Africa” for its strong agricultural sector, but in 2000 the increasingly authoritarian and increasingly erratic Mugabe launched a campaign of violent seizures of white-owned commercial farms. The seized farms were then given to his cronies and political supporters, and within a year or two Zimbabwe became a net importer of food.

In 2009, with a collapsing economy and a hyperinflation which ruined the Zimbabwean dollar, Zimbabwe started using foreign currencies, including the U.S. dollar and South African rand.

A year earlier, in 2008, the Zimbabwean hyperinflation set the all-time world record of 500 billion percent.

Beginning in 2008, Zimbabweans had to carry large plastic bags filled with banknotes to buy basic goods at grocery stores. If they wanted to buy electronic items such as toasters, radios, they had to use wheelbarrows to carry the notes.

The worthlessness of the Zimbabwean dollar led a situation, beginning in 2009, in which most transactions in Zimbabwe were carried out using U.S. dollars and the South African rand.

“The decommissioning of the Zimbabwean dollar has therefore been pending and long outstanding since 2009,” the governor of the Reserve Bank of Zimbabwe, John Mangudya, said on Thursday. “We cannot have two legal currency systems. We need therefore to safeguard the integrity of the multiple-currency system or dollarization in Zimbabwe.”

Beginning Monday, citizens who have been holding Zimbabwean dollar accounts before March 2009 can ask their banks to convert their balance into U.S. dollars, Mangudya, said.

Zimbabweans will have until September to turn in their old banknotes, which are also being sold as souvenirs to tourists.

The Guardian reports that bank accounts with balances of up to 175 quadrillion (175,000 trillion) Zimbabwean dollars will be paid $5. Those with balances above 175 quadrillion dollars will be paid at an exchange rate of $1 for 35 quadrillion Zimbabwean dollars.

The highest — and last — banknote which was printed by the bank in 2008 was 100 trillion Zimbabwean dollars. It was not enough, though, to ride a public bus to work for a week.

The Reserve Bank said that customers who still had stashes of old Zimbabwean notes could bring the money to any bank and get $1 for every 250 trillion they hold. A holder of a 100 trillion banknote will get 40 cents for each note.

The bank said it has set aside $20 million to pay Zimbabwean dollar currency holders.

Bloomberg reports that under policies implemented in the last four years by a coalition government, the economy began expanding and the recognition of foreign currencies as legal tender helped tame inflation. Consumer prices fell an annual 2.7 percent in April, according to government statistics.