Political sketch
Formerly British South Africa, Mashonaland, Matabeleland, Southern Rhodesia, Rhodesia, and part of British Central Africa and the Federation of Rhodesia and Nyasaland (also called the Central African Federation). Unilaterally declared independence from the United Kingdom on 11 November 1965; gained internationally recognized independence on 18 April 1980.
In 1889 Cecil Rhodes formed the British South Africa Company to colonize present-day Zimbabwe and neighboring countries. Present-day Zambia and Zimbabwe were named Rhodesia after Rhodes. During the 1890s, white settlers began to arrive in substantial numbers and claim mineral rights. The Ndebele and the Shona tribes rose in revolt, but by 1897 they were suppressed. The country continued to be governed by the company until 1923. In a referendum in 1922, the eligible voters--34,000 whites--chose to become a self-governing British colony instead of joining South Africa. On 1 October 1923 Southern Rhodesia became a British colony. In 1953 Southern Rhodesia (now Zimbabwe) united with Nyasaland (now Malawi) and Northern Rhodesia (now Zambia) to form the Federation of Rhodesia and Nyasaland (also called the Central African Federation). During the ten years of the federation, the black African nationalist movement, led by the National Democratic Party (NDP), intensified. The NDP was banned and split into the Zimbabwe African People's Union (ZAPU) and the Zimbabwe African National Union (ZANU). The federation dissolved in 1963 because Northern Rhodesia and Nyasaland did not want to be dominated by the white minority regime of Southern Rhodesia.
Southern Rhodesia again became a British colony until 11 November 1965, when it unilaterally declared independence as Rhodesia to prevent the British government from giving greater representation to blacks. The United Kingdom organized international trade sanctions against Rhodesia, which had some effect, but the regime survived with the help of the white minority regime in South Africa. Rhodesia continued to export minerals such as chromium and agricultural products such as tobacco through South Africa and a network of middlemen willing to ignore the sanctions. ZAPU and ZANU guerrilla organizations were formed in Zambia and Mozambique, respectively, from which they launched attacks. Sporadic warfare over nearly a decade caused thousands of people to die and almost a million to be uprooted. The white minority finally consented to hold multiracial elections supervised by the British in 1980. Robert Mugabe of the ZANU became prime minister. As prime minister he at first made attempts to reduce tribal tensions, but his rule became more and more repressive after 1990, when he became president; today (2005), he is effectively a dictator. The name of the capital was changed from Salisbury to Harare in 1982. The economy decline substantially starting in the 1990s. The government seized land from white farmers and gave much of it to cronies who were unable to use it productively. Zimbabwe's economy is collapsing as a result of those policies.
Wars since 1500
Matabele-British War, 1893; Zimbabwean (Rhodesian) Civil War of 1971-1980 (ZANU and ZAPU guerillas against white minority regime); Ndebele Massacre, 1983 (by the Zimbabwean army); Congolese (Congo-Kinshasa) Civil War of 1998-2003 (Zimbabwean troops involved).
Convertibility
Notes of the two note-issuing banks of the time were made legal tender in Southern Rhodesia by Southern Rhodesia, Bank Notes Ordinance of 1922. The ordinance was repealed 30 June 1925, but a new act making them legal tender came into force on 30 June 1931.
The sterling area:
On 2 August 1914, soon after the First World War began, the United Kingdom issued a proclamation imposing a one-month moratorium of payment for bills of exchange accepted before 4 August; an act of 3 August 1914 gave legislative sanction to the proclamation. The moratorium was subsequently extended for a month and ended on 4 November 1914. Legally the pound sterling remained convertible into gold and could be exported, but the risk to shipping from German submarines made the cost of shipment prohibitive, so the United Kingdom was in effect off the gold standard. The British government refused to include private shipments of gold in its war-risk insurance scheme. After the war, the export of gold was prohibited from 1 April 1919 under regulations that were given statutory form in 1920. On 28 April 1925 the government announced that the act would not be renewed when it expired on 31 December 1925. On 13 May 1925 the United Kingdom resumed the gold standard.
The United Kingdom abandoned the gold standard on 21 September 1931. The currencies of British colonies were almost all linked to the pound sterling through currency boards; being on a sterling-exchange standard rather than a gold-exchange standard, they followed the pound sterling off gold. Over the next few years, some former British colonies (Australia, New Zealand, South Africa) and other countries that had important trade links with the United Kingdom switched from gold to the pound sterling as their official or actual anchor. The result was termed the sterling area. The United Kingdom imposed exchange controls on 4 September 1939, the day after entering the Second World War. Most countries that were not current or former British colonies soon left the sterling area. Among the remaining countries, both current- and capital-account transactions were free of restrictions within the sterling area, but were restricted in dealings with outside countries. After the Second World War, the United Kingdom returned to the gold standard under the Bretton Woods system. It removed exchange controls on 15 August 1947, but reimposed them on 20 August 1947 after suffering a large loss of foreign reserves. Sterling had a dual exchange rate from 1961 until the United Kingdom abolished exchange controls. The sterling area remained in existence because sterling was not fully convertible. It began to crumble after the United Kingdom again abandoned the gold standard on 23 June 1972. By January 1973 the sterling area had shrunk to the British Isles and a few small British colonies; even Hong Kong had abandoned sterling as its anchor currency. The United Kingdom abolished exchange controls on 24 October 1979, ending the sterling area.
Zimbabwe alone:
Bond (1996) claims that Zimbabwe (then called Southern Rhodesia) imposed import and exchange rate controls in 1947, but the reports of the currency board make no mention of them. Apparently he has in mind the same controls imposed throughout the sterling area, which were not particular to Zimbabwe. On 23 February 1961, the Federation of Rhodesia and Nyasaland extended exchange controls to the sterling area (Federation of Rhodesia and Nyasaland, Currency and Exchange Control [Temporary] Act 1961, cited in Bank of Rhodesia and Nyasaland annual report 1961: 20). Exchange control was extended indefinitely on 30 November 1962 (IMF ARER 1963: 317). It was carried over into Rhodesia (Zimbabwe), Zambia, and Malawi when the Federation of Rhodesia and Nyasaland dissolved. The United Kingdom expelled Rhodesia from the sterling area in November 1965, shortly after Rhodesia unilaterally declared independence on 11 November 1965.
On 30 November 2002 Zimbabwe closed all foreign-exchange bureaus; thereafter, only banks were licensed to deal in foreign exchange.
Other
Defaults on or restructurings of debt to the private sector (mainly from Purcell and Kaufman 1993 and Standard & Poor's 2004): 1965 (foreign currency bond debt, selectively repudiated following unilateral declaration of independence), 2000-present (foreign currency bank debt).
Reinhart and Tokatlidis (2000: 33) dating of recent financial liberalization: Domestic (notably interest rates) 1981, external (notably foreign-exchange market and participation by foreign financial institutions) 1994.
Banking crises (data since 1970s mainly from Caprio and Klingebiel 1999 and Frydl 1999): Problems 1995-2004?, when two of the five banks had high nonperforming loans; further problems December 2003-2004, when a change in monetary rate policy created a liquidity squeeze affecting about 40% of the banking system and inflicting losses of about Zimbabwe $2 trillion (US$350 million).
Frankel and Rose (1996) list of currency crashes: 1983, 1991. Another currency crash occurred on 14 November 1997, when the currency depreciated almost 75% in a few hours (Bond 1988: xv-xvi).
The Southern Rhodesia Currency Board accumulated a reserve against the depreciation of its silver coins in circulation, because it counted the silver content of the coins as an asset on its balance sheet. On 31 March 1940, the end of the board's financial year, the depreciation reserve was 3.6% of total assets, whereas by 31 March 1946 the reserve was 10.6% of total assets (Southern Rhodesia Currency Board annual report, 31 March 1940: 5; 31 March 1946: 4).
References
Primary sources:
--Laws and decrees:
Great Britain (United Kingdom). Gazette. 1665-present. Oxford Gazette (1996-1666); London Gazette (1666-present). Oxford (1665-1666); London (1666-present): His/Her Majesty's Stationery Office from 1903. Online at <http://www.gazettes.online.co.uk>; as of September 2005, gazettes since 1900 are available.
Rhodesia. Gazette. 1963-1980? Rhodesia Government Gazette. Salisbury, Southern Rhodesia. (Successor to Rhodesia and Nyasaland gazette; succeeded by Zimbabwe gazette.)
Rhodesia and Nyasaland (Federation). Gazette. 1953-1963. Federal Government Gazette. Salisbury, Southern Rhodesia. (Successor to Southern Rhodesia gazette; succeeded by Rhodesia gazette.)
Southern Rhodesia. Gazette. 1903-1953. The British South Africa Company Government Gazette (1903-1923); Government Gazette-Southern Rhodesia (1923-1953). Salisbury, Southern Rhodesia. (Succeeded by Rhodesia and Nyasaland gazette.)
Zimbabwe. Gazette. 1981-present. Zimbabwean Government Gazette. Harare: Government Printer. (Successor to Rhodesia gazette.)
--Publications of monetary authorities:
Bank of Rhodesia and Nyasaland. Annual report. 1956/1961-1964. Annual Report. Salisbury, Southern Rhodesia: Bank of Rhodesia and Nyasaland. (The first annual report covers the period 1956-1961.)
Reserve Bank of Rhodesia. Annual report. I found no record that the organization ever published an annual report under this name. The bank later became the Reserve Bank of Zimbabwe.
Reserve Bank of Zimbabwe. Annual report. 1994-present. Annual Report and Statement of Accounts for the Year... (1994-1998 or 1999); Annual Report (1998 or 1999-present). Harare: Reserve Bank of Zimbabwe. (Although the Reserve Bank of Rhodesia became the Reserve Bank of Zimbabwe in 1980, the successor central bank did not publish its first annual report until 1994.)
Reserve Bank of Zimbabwe. Bulletin. 1980-present. Quarterly Economic and Statistical Review (1980-?); Monetary and Economic Developments (?-present). Harare: Reserve Bank of Zimbabwe.
Reserve Bank of Zimbabwe. Final Accounts. 1993 only? Harare: Reserve Bank of Zimbabwe.
Reserve Bank of Zimbabwe. Highlights. 2003?-present. Weekly Economic Highlights. Harare: Reserve Bank of Zimbabwe.
Rhodesia and Nyasaland (Federation). Central African Currency Board. Annual report. 1953/1954-1955/1956. First [Second, Third] Report of the Central African Currency Board. Salisbury, Southern Rhodesia: Central African Currency Board (printed by Governent Printing and Stationery Office).
Southern Rhodesia Currency Board. Annual report. 1939/1940-1952/1953. First Report of the Southern Rhodesia Currency Board, Covering the Period Ended 31st March, 1940 (1939-1940); Second [etc.] Report of the Southern Rhodesia Currency Board, Year Ended 31st March, 1941 [etc.] (1940/1941-1952/1953); the Seventh, Ninth, Tenth and Eleventh reports have the word "Annual" in their titles, but the rest do not. Salisbury, Southern Rhodesia: Government Stationery Office.
--Web site of the current monetary authority (viewed 20 September 2005):
<http://www.rbz.co.zw>
--Other publications or Web sites:
None.
Main secondary sources:
BCEAO. 1966. Banque Centrale des États de l'Afrique de l'Ouest. Notes d'information et statistiques, issue "L'Afrique des monnaies," January 1966. Paris: Banque Centrale des États de l'Afrique de l'Ouest.
Bond, Patrick. 1996. Uneven Zimbabwe: A Study of Finance, Development, and Underdevelopment. Trenton, New Jersey: Africa World Press.
Chalmers, [Sir] Robert. 1893. A History of Currency in the British Colonies. London: Eyre and Spottiswoode for Her Majesty's Stationery Office. (A brief mention of the very earliest legislation.)
Crossley, [Sir] Julian [Stanley], and John Blandford. 1975. The DCO Story: A History of Banking in Many Countries 1925-71. London: Barclays Bank International. (Concerns Barclays Bank Dominion, Colonial and Overseas.)
De Kock, Gerhard [Petrus Christiaan]. 1954. A History of the South African Reserve Bank (1920-1954). Pretoria: J. L. van Schalk.
Henry, J[ames] A., and H. A. Siepmann. 1963. The First Hundred Years of the Standard Bank. London: Oxford University Press. (The Standard Bank operated widely in Africa.)
IMF ARER. 1950-present. International Monetary Fund. Annual Report on Exchange Restrictions (1950-1978), Annual Report on Exchange Arrangements and Exchange Restrictions (1979-1988), Exchange Arrangements and Exchange Restrictions: Annual Report (1989-present). Washington: International Monetary Fund. (Contains information on IMF member countries and some of their dependencies.)
Pick's Currency Yearbook. 1955-1977/79. New York: Pick Publishing. Succeeded by Pick's World Currency Report and later World Currency Yearbook.
Pick's World Currency Report. 1980-1984. New York: Pick Publishing Corporation. Succeeded by World Currency Yearbook.
Reserve Bank of Zimbabwe. 1983. The Currency Media of Southern Rhodesia (from the Time of the Charter to 1953), of the Federation of Rhodesia and Nyasaland (from 1954 to 1963), of Rhodesia (from 1964 to 1979), and of Zimbabwe (from 1980). Harare: Reserve Bank of Zimbabwe.
Sowelem, R[afik] A[hmed]. 1967. Towards Financial Independence in a Developing Economy: An Analysis of the Monetary Experience of the Federation of Rhodesia and Nyasaland, 1952-63. London: Allen and Unwin.
Standard Bank. 1967. Standard Bank, 1892-1967: Three Quarters of a Century of Banking in Rhodesia. Salisbury: Standard Bank. (Concerns Zimbabwe.) (I have not seen this.)
World Currency Yearbook. 1984-1990/93. Brooklyn, New York: International Currency Analysis. Previously called Pick's Currency Yearbook (1955-1979) and Pick's World Currency Report (1980-84). New York: Pick Publishing Corporation.
Monetary authorities: Zimbabwe
| Dates | Type | Name | Source | Remarks |
| 20 July 1892
-29 February 1940 |
free banking | multiple (2) note-issuing banks | United Kingdom, Standard Bank of British South Africa (later Standard Bank of South Africa) Memorandum of Association, 13 October 1862, cited in Henry and Siepmann (1963: 5); Bank of Africa registration of incorporation, 5 August 1879, cited in [Arndt 1928?]; Mashonaland, Legal Tender Regulations, 1895, cited in Reserve Bank of Zimbabwe (1983: 19) | The first bank was the Standard Bank of South Africa (headquarters London, England), in Salisbury (now Harare), on 20 July 1892 (Henry and Siepmann 1963: 120-1). The second bank was the Bank of Africa (headquarters London, England), in Salisbury (Harare), in 1895 [recheck Reserve Bank of Zimibabwe historical summary of coinage]. There were no other note-issuing banks during this period. The Bank of Africa was absorbed in 1912 by the National Bank of South Africa (headquarters Johannesburg, South Africa); it, in turn, was taken over by Barclays Bank (Dominion, Colonial and Overseas) (headquarters London, England) in February 1926. One source [recheck Reserve Bank of Zimibabwe historical summary of coinage] says South Africa made seigniorage payments to Southern Rhodesia from 1926-1931 for Southern Rhodesia's use of South African coins. The first coins were issued in 1932 (Southern Rhodesia, Coinage Act of 1932, cited in Reserve Bank of Zimbabwe 1983: 5). British coins were demonetized on 8 July 1939 (Southern Rhodesia, Proclamation No. 12 |
| 1 March 1940
-11 March 1954 |
joint currency board (as part of a currency union) | Southern Rhodesia Currency Board (headquarters Salisbury, Southern Rhodesia [now Harare, Zimbabwe]) | Southern Rhodesia, Coinage and Currency Act, Act No. 32 of 1938, cited in Southern Rhodesia Currency Board annual report, 31 March 1940: 1; Southern Rhodesia, Proclamation No. 36 of 1939 cited in Southern Rhodesia Currency Board annual report, 31 March 1940: 1; Southern Rhodesia, Coinage and Currency Amendment Act, No. 23 of 1942, cited in Southern Rhodesia Currency Board annual report, 31 March 1943: 1; Southern Rhodesia, Coinage and Currency Amendment Act, 1947, cited in Southern Rhodesia Currency Board annual report, 31 March 1947: 1 | The three colonies of British Central Africa established a currency board to gain seigniorage for member governments. Initially the agreements of Northern Rhodesia (now Zambia) and Nyasaland (now Malawi) to participate were informal, but they later became formal. The currency board took over issuance of coins from the Southern Rhodesian treasury on 1 March 1940, and issued its first notes on 8 June 1940. The 1942 amendment allowed the currency board to hold up to 7% of its assets in securities of Southern Rhodesia and up to 3% in securities of Northern Rhodesia. Total reserves were 110%, so the principle of 100% foreign reserve backing was effective. The 1947 amendment raised the percentages to 10% for Southern Rhodesian securities, 7% for Northern Rhodesian securities, and 3% for Nyasaland securities. However, the currency board only ever held Southern Rhodesian government securities. It inherited such securities from the Southern Rhodesia coinage fund amounting to 11.9% of its initial assets, but the percentage fell over time as the currency board |
| 12 March 1954
-31 March 1956 |
joint currency board (another) (as part of a currency union) | Central Africa Currency Board (headquarters Salisbury, Southern Rhodesia [now Harare, Zimbabwe]) | Federation of Rhodesia and Nyasaland, Coinage and Currency Act, Act No. 5 of 1954, cited in Central African Currency Board annual report, 31 March 1954: 1 | Northern Rhodesia (now Zambia) and Nyasaland (now Malawi) gained a larger role in the new joint currency board. British coins remained accepted as legal tender through 31 December 1954 in Northern Rhodesia and Nyasaland (Central African Currency Board annual report, 31 March 1954: 2). The Central Africa Currency Board used Southern Rhodesian notes and coin designs and never issued its own distinctive designs. The only local assets of the currency board were a small amount of Southern Rhodesian securities, never exceeding 5% of total assets, despite provisions that allowed it to hold more. |
| 1 April 1956
-15 November 1964 |
joint central bank (as part of a currency union) | Bank of Rhodesia and Nyasaland (headquarters Salisbury, Southern Rhodesia [now Harare, Zimbabwe]) | Federation of Rhodesia and Nyasaland, Bank of Rhodesia and Nyasaland Act, No. 2 of March 1956, cited in Central African Currency Board annual report, 31 March 1956: 4 and Bank of Rhodesia and Nyasaland annual report 1961: 1 | The Federation of Rhodesia and Nyasaland established a central bank as the monetary counterpart to greater political self-government. The central bank issued federal notes and coins. |
| 16 November 1964
-present (2005) |
own central bank | Reserve Bank of Rhodesia / Reserve Bank of Zimbabwe from 18 April 1980 (headquarters Salisbury, Southern Rhodesia, later known as Harare, Zimbabwe]) | Southern Rhodesia, Reserve Bank of Rhodesia Act, No. 24 of 1964, cited in BCEAO (1966: 12); Bank of Rhodesia and Nyasaland annual report 1964: 1 | Malawi, Zambia, and Rhodesia (now Zimbabwe) each established separate national central banks when the Federation of Rhodesia and Nyasaland broke up. The Reserve Bank of Rhodesia was the core of the previous joint central bank. Zimbabwe joined the IMF on 29 September 1980. In 2003 [recheck news reports for the precise date] the currency had depreciated so much that some denominations cost more to print than their face value. The government issued "bearer cheques" printed on one side only [recheck] as a stopgap measure because it lacked the foreign exchange to buy high-quality imported paper and ink for notes. At the end of 2005 the bearer cheques were still circulating. |
Exchange rate arrangements: Zimbabwe
| Dates | Official arrangement | Source | Unofficial arrangement, if different | Remarks |
| 1891
-1 November 1914 |
fixed; local £1 = UK£1 = 7.32238g gold | Mashonaland, Ordinance No. 3 of 1891 (of British South Africa Company, which operated present-day Zambia and Zimbabwe as a concession at the time), cited in Chalmers (1893: 240); Ordinance No. 6 of 1894, cited in Reserve Bank of Zimbabwe (1983: 5) | The 1891 ordinance adopted the laws of Cape of Good Hope then in force, including its coinage laws. Royal (United Kingdom) proclamations of 1910 and 1911 specified various British coins for use in Southern Rhodesia (Reserve Bank of Zimbabwe 1983: 5). The Southern Rhodesian pound, later to be used in what are now Zimbabwe, Zambia, and Malawi, did not exist as an officially separate currency from the pound sterling until 1 March 1940. | |
| 2 November 1914
-17 May 1925 |
fixed; local £1 = UK£1 | de Kock (1954: 7-8) on South Africa | The currencies of the United Kingdom and South Africa both floated against gold in this period. Southern Rhodesia followed. Local bank notes were made forced tender by Southern Rhodesia, Bank Notes Ordinance, 1922, repealed on 20 June 1925 when the United Kingdom returned to the gold standard (Reserve Bank of Zimbabwe 1983: 21). | |
| 18 May 1925
-11 October 1931 |
fixed; local £1 = UK£1 = 7.32238g gold | Kock (1954: 78) on South Africa | The United Kingdom returned to gold standard on 27 April 1925; South Africa and Zimbabwe returned on 18 May 1925. | |
| 12 October 1931
-29 February 1940 |
fixed; local £1 = UK£1 | Henry and Siepmann (1963: 237); Southern Rhodesia, Act No. 28 of 1931 and Act No. 34 of 1931, both cited in Reserve Bank of Zimbabwe (1983: 21) | Pick's Currency Yearbook (1964-1965: 411) says black-market trading started at the beginning of the Second World War, but was rarely sizeable except when there was speculation that the pound sterling would be devalued or there was local unrest. Rates generally followed rates for the South African pound, but at a level 4-5% more depreciated. | Northern and Southern Rhodesia (now Zambia and Zimbabwe) abandoned the gold standard soon after the United Kingdom, which had done so on 21 September 1931, but considerably before South Africa. Act No. 28 of 1931 allowed the Treasurer of the colony to permit issue of bank notes for circulation in the colony, while Act No. 34 of 1931 made notes issued by banks forced tender. |
| 1 March 1940
-11 March 1954 |
fixed (as part of a currency union); Southern Rhodesian £1 = UK£1 | Southern Rhodesia, Coinage and Currency Act, Act No. 32 of 1938, cited in Southern Rhodesia Currency Board annual report, 31 March 1940: 1 | See above. | The Southern Rhodesian pound was created when a regional currency board came into existence. It was named after the pound sterling. |
| 12 March 1954
-31 March 1956 |
fixed (as part of a currency union); Central African £1 = UK£1 | Federation of Rhodesia and Nyasaland, Coinage and Currency Act, No. 2 of 1954, cited in Central Africa Currency Board, 31 March 1954: 1 | See above. | The Southern Rhodesian pound was renamed to reflect the increased participation of Northern Rhodesia (Zambia) and Nyasaland (Malawi). |
| 1 April 1956
-15 November 1964 |
pegged (as part of a currency union); Central African £1 = UK£1 | Federation of Rhodesia and Nyasaland, Bank of Rhodesia and Nyasaland Act, No. 2, March 1956, cited in Central African Currency Board annual report, 31 March 1956: 4 and Bank of Rhodesia and Nyasaland annual report 1961: 1; Government Gazette Notice No. 52 of 1956 | The black market rate was Central African £1= US$2.65 in 1960-1961, versus an official cross rate of US$2.80 (Pick's Currency Yearbook 1964-1965: 411). In the black market the Central African pound was therefore more depreciated against the US dollar than the pound sterling was | The Federation of Rhodesia and Nyasaland replaced its currency board with a central bank, so the exchange rate changed from fixed to pegged. |
| 16 November 1964
-mid or late November 1965 |
pegged; Rhodesian £1 = UK£1 | Rhodesia, Reserve Bank of Rhodesia Act, cap. 173 of 1964 | The black market rate was Rhodesian £1 = US$2.55 at the end of 1964, versus an official cross rate of US$2.80 US$2.80 (Pick's Currency Yearbook 1964-1965: 411). In the black market the Rhodesian pound was therefore more depreciated against the US dollar than the pound sterling was | The Rhodesian pound replaced the Central African pound in present-day Zimbabwe upon the breakup of the Federation of Rhodesia and Nyasaland. |
| mid or late November
1965
-16 February 1970 |
pegged; Rhodesian £1 = US$2.80 = 2.48828g gold (nominally) | Pick's Currency Yearbook (1969: 437) | Pick's Currency Yearbook continues to list black market rates more depreciated than the official rate. | The United Kingdom expelled Rhodesia from the sterling area after Rhodesia unilaterally declared independence on 11 November 1965. Rhodesia switched to gold as its anchor currency at the prevailing cross rate. The US dollar seems to have been the real anchor and possibly the intervention currency. The South African rand was also important because South Africa's financial markets remained open to the white minority Rhodesian government throughout the period of minority rule, which lasted to 1980. |
| 17 February 1970
-22? August 1971 |
pegged; Rhodesian $1 = US$1.40 = 1.22414g gold (nominally) | Rhodesia, Decimal Currency Act of 1967; Reserve Bank of Zimbabwe (1983: 26) | Pick's Currency
Yearbook continues to
list black market rates
more depreciated than
the official rate.
RR: Parallel market data start in July 1970. Parallel market premium in double digits but peaking at 101% in March 1971. |
Introduced a decimal currency at Rhodesian $2 = Rhodesian £1. Rhodesia named the new currency the dollar to emphasize its independence from the United Kingdom and the closer affinity of new unit both in value and in decimalization with the US dollar. Gold convertibility for all countries ended in practice when the United States abandoned the gold standard on 15 August 1971. |
| 23? August 1971
-19 December 1971 |
pegged; Rhodesian $1 = 1 South African rand = 1.22414g gold (nominally) | Pick's Currency Yearbook (1976-1977: 499) | RR: Parallel market premium a bit above 30%. | Switched to the South African rand as the anchor currency. |
| 20 December 1971
-29 June 1972 |
pegged; Rhodesian $1 = US$1.52 | Pick's Currency Yearbook (1976-1977: 499) | RR: Parallel market premium in 30-40% range. | Switched back to the US dollar as the anchor currency and revalued to offset the devaluation of the US dollar against gold on 18 December 1971. |
| 30 June 1972
-25? October 1972 |
managed? float | Pick's Currency Yearbook (1976-1977: 499) | RR: Parallel market premium in 20-30% range. | Floated after most countries in the sterling area, including South Africa, left the area when the United Kingdom floated the pound sterling on 23 June 1972. |
| 26? October 1972
-13 February 1973 |
pegged; Rhodesian $1 = US$1.52 = 1.22414g gold (nominally), and Rhodesian $0.84 = 1 South African rand | Pick's Currency Yearbook (1976-1977: 499) | RR: Parallel market premium around 25%. | Restored the exchange rate with the US dollar that had existed before the Rhodesian dollar floated. This rate implied a slight revaluation against the South African rand, which had been at Rhodesian $0.877 = 1 South African rand. |
| 14 February 1973
-4 June 1973 |
pegged; Rhodesian $1 = US$1.69 = 1.22414g gold (nominally) | Pick's Currency Yearbook (1976-1977: 499) | RR: Parallel market premium around 25%. | Did not follow the devaluation of the US dollar on 13 February 1973. |
| 5 June 1973
-21 September 1975 |
pegged; Rhodesian $1 = US$1.773 = 1.306101g gold (nominally), and Rhodesian $0.84 = 1 South African rand | Pick's Currency Yearbook (1976-1977: 499) | RR: Parallel market premium rising to 62% in August 1975. | Followed South Africa's revaluation of its central exchange rate against US dollar. |
| 22 September 1975
-12 October 1977 |
pegged; Rhodesian $1 = US$1.60 = 1.306101g gold (nominally), and Rhodesian $0.746 = 1 South African rand | Pick's Currency Yearbook (1976-1977: 499) | RR: Parallel market premium rising to low to mid triple digits. | Devalued against the US dollar along with South Africa's devaluation of 22 September 1975. Rhodesia's devaluation was less. |
| 13 October 1977
-2 April 1978 |
pegged; Rhodesian $1 = US$1.50 and Rhodesian $0.768 = 1 South African rand | World Currency Yearbook (1986-1987: 207) | RR: Parallel market premium falls below 100% at briefly. | Devalued 8% against the US dollar and 5% against the "softer" South African rand as a guerilla war weakened the economy. By this time the gold parity was meaningless in practice. |
| 3 April 1978
-6 March 1980 |
pegged; Rhodesian $1 = US$1.471 and Rhodesian $1 = 1.24 South African rand | World Currency Yearbook (1986-1987: 207); IMF ARER (1980: 361) | RR: Parallel market premium highly variable, peaking above 200% but falling to mid double digits by end of period. | Devalued 5% against the South African rand and 2% against US dollar. Guerilla war and bad weather had caused economic decline. |
| 7 March 1980
-17 April 1980 |
flexible basket | IMF ARER (1981: 466, 469) | RR: Parallel market premium in low double digits. De facto crawling band around US dollar. Band width +/-2%. | Discontinued pegging to the US dollar and the South African rand. The basket consisted of the French franc, German mark, South African rand, Swiss franc, pound sterling, and US dollar, but the precise weights were not disclosed. The US dollar was the intervention currency. |
| 18 April 1980
-31 July 1983 |
Zimbabwe dollar, flexible basket | press reports (on the name change); IMF ARER (1983: 522; 1984: 547) | RR: Parallel market premium highly variable, ending period at 231%. De facto crawling band around US dollar. Band width +/-2%. | The name of the country changed from Rhodesia to Zimbabwe, hence the name of the currency changed also. On 9 December 1982, the central bank depreciated the currency by 16.5% against the US dollar, from US$1.321-1.3104 to US$1.1205-1.0937 = Zimbabwe $1. In the first half of 1983, it made several devaluations totaling 5% against the US dollar, taking the exchange rate from Zimbabwe $0.91945 to Zimbabwe $0.96135 =US$1. |
| 1 August 1983
31 December 1993 |
flexible basket, dual rate | IMF ARER (1984: 547) | RR: Parallel market premium highly variable, mostly in mid to low double digits. Managed float to April 1991; freely falling / managed floating from May 1991. | Imposed a tax of 20% on certain outward payments--a form of dual exchange rate. On 1 July 1993, the government reduced the tax on the sale of foreign exchange for holiday travel from 20% to 10%. |
| 1 January 1994
-1 July 1994 |
independent float, dual rate | Reserve Bank of Zimbabwe annual report 1994: 3; IMF ARER (1995: [page on independent floating]) | The second rate was
also floating, with little
or no intervention by
the central bank.
RR: Parallel market premium mostly in teens. Freely falling / managed float. |
Devalued the official exchange rate by 17% and introduced a floating second rate. [So, did the basket end here? Be clearer on this point]] |
| 2 July 1994
-30 March 1999 |
independent float | Reserve Bank of Zimbabwe annual report 1994: 3 | RR: Parallel market premium in low double digits to single digits; near the low end when end in December 1998. Managed float to November 1997, freely falling / managed float from November 1997. | Unified the exchange rate. |
| 31 March 1999
-31 July 2000 |
pegged; Zimbabwe $38 = US$1 | IMF ARER (2000: 973) | Reserve Bank of Zimbabwe annual report 2000: 18 notes a parallel market toward the end of 1999. | The central bank and commercial banks agreed to peg the Zimbabwe dollar to the US dollar even though the central bank did not formally announce a peg. I therefore follow the IMF in counting the official exchange rate as pegged. |
| 1 August 2000
-17 October 2000 |
crawling band to US dollar (IMF: crawling peg) | Reserve Bank of Zimbabwe annual report 2000: 18; IMF ARER (2001: 1026) | Press reports note a parallel market. | Devalued from Zimbabwe $38 to Zimbabwe $50 = US$1 and established a crawling peg with a band of +/-5% around the central rate. The central bank determined the exchange rate by adjusting for inflation differentials between Zimbabwe and its trading partners. On 4 August 2000 the central bank allowed producers of gold, horticulture products, and tobacco to receive 20% of their payment in foreign currency, which they could then use to buy imports (IMF ARER 2001: 1034). This practice borders on a dual exchange rate, but the IMF continues to classify the exchange rate as unitary, and in this case I follow its practice. |
| 18 October 2000
-29 June 2001 |
pegged; semiofficial rate Zimbabwe $55 = US$1 (IMF: crawling peg; pegged from 30 June 2001) | related legislation was Zimbabwe, Exchange Control (Exchange Rate Management) Order, October 2000, cited in Reserve Bank of Zimbabwe annual report 2000: 18 | Press reports note a black market whose rate was considerably depreciated from the semiofficial rate. | Pegged to the US dollar while inflation continued to be high. On 30 June 2001 the IMF reclassified the exchange rate in view of the rate's persistent rigidity (IMF ARER 2002: [page to come]). I classify the exchange rate as pegged from an earlier date because the rate of Zimbabwe $55 = US$1 was semiofficial. On 30 November 2002 the government closed all foreign-exchange bureaus; after that, only banks were allowed to deal in foreign exchange (IMF ARER 2003: 1086). |
| 1 March 2003
-11 January 2004 |
pegged, dual rate; official rate Zimbabwe $55 = US$1 | IMF ARER (2004: 1058, 1066) | There also existed a black market where the exchange rate was still more depreciated. | Established a mid rate of Zimbabwe $824 = US$1 for private transactions, and abolished the special rates previously applicable to exports of gold and tobacco. |
| 12 January 2004
-16 January 2004 |
pegged, dual rate; official rate Zimbabwe $824 = US$1 (IMF: managed float) | Reserve Bank of Zimbabwe annual report 2003: 37; IMF ARER (2004: 1058, 1066) | The second rate, called the tender rate, was a floating rate. There also existed a black market where the exchange rate was still more depreciated, because "nonpriority" transactions were ineligible for the tender rate. | Eliminated the rate of Zimbabwe $55 = US$1. The large devaluation, though not enough to catch up to the black-market rate, reflected the economic mismanagement of the Mugabe government. |
| 17 January 2004
-17? August 2005 |
pegged, multiple rates; official rate Zimbabwe $824 = US$1 (IMF: managed float) | IMF ARER (2005: 1068) | In practice, a managed float for most transactions. The black market continued. As of January 2004 press reports place the black-market rate at about Zimbabwe $6,000 = US$1. | The central bank began to buy 75% of the foreign exchange from the tobacco auction at the tender (market) rate, buying the remaining 25% at Zimbabwe $824. This practice gave rise to a third exchange rate. IMF ARER (2004: 1058) lists Zimbabwe as having a unitary exchange rate despite having two different officially sanctioned exchange rates. On 31 January 2004 the IMF reclassified the exchange rate as a managed float because of the behavior of the second rate. I base my classification on the main official rate. On 1 November 2004 the central bank introduced another exchange rate, a guranteed minimum rate for inward remittances. The remittance rate, also called the diaspora rate was initially Zimbabwe $6,200 = US$1. The central bank devalued it to Zimbabwe $9,000 = US$1 on 19 May 2005 (Reserve Bank of Zimbabwe bulletin, May 2005: 4; IMF ARER 2005: 1068). On 21 July 2005 the government eliminated the tender rate, leaving the official rate and a second exchange rate of Zimbabwe $17,500 = US$1 as the main exchange rates. However, there were also special rates for gold and cotton. Also |
| 18[?] August 2005
-19[?] October 2005 |
pegged, multiple rates [?]; official rate Zimbabwe $24,000 [24,500?] = US$1 (IMF: managed float [?]) | In practice, a managed float for most transactions. The black market continued. | [Comments] | |
| 20[?] October 2005
-present (2005) |
[A futher devaluation and liberalization of the exchange] (IMF: managed float [?]) | news reports [and RBZ Web site?] | In practice, a managed float for most transactions. The black market continued. | [See news reports.
Exporters were
allowed to trade at
the marker tate 70%
of the foreign
currency they
generated; the
central bank bought
the rest at a set rate,
initially Zimbabwe
$26,000 = US$1. The
RBZ's monetary
policy statement
does not only deal
with this key issue - it
promises that the
official exchange rate
of 26 000 to 1 will be
adjusted gradually
over time until the
average exchange
rate of both markets
is the same - the so-called "convergence" factor.] |