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Zimbabwe - 2016 Bond Issues

The King of Funny Money

These are two Bond notes issued in late 2016 ($2) and early 2017 ($5). Zimbabwe on 12.04.2009 abandoned its own currency to end hyperinflation and commenced using foreign currencies such as US Dollar, South Africa Rand, Euro, British Pound, Botswana Pula, Indian Rupee and even the Chinese Yuan and Australian Dollar as legal tender (some of these foreign currencies were added on later). These Bond notes are redeemable for all these foreign currencies or can be used as normal day to day transactions. However these Bond notes are not legal tender outside the country. The value of these Bond notes are at parity with the US$ when it was first issued.

The Zimbabwe inflation crises started in the late 90s when the President Robert Mugabe removed white farmers and replaced them with blacks farmers. Unfortunately due to lack of experience in managing these farms, the productions dropped and so does foreign incomes too. To over come this, the government decided to print more money to pay for their bills. Now, any Economist out there will tell you that this will not work unless you have the foreign reverse to back this up. Whilst this is bad to the country, it was haven to collectors, including myself. Since 2006, a total of 70 notes were issued from 1 cent to 100 Trillion dollars. I still do not understand why they even bother to print those lower denomination notes such as the 1, 5, 10, 50 cents and even the $1 when the values do not even worth the paper printed on.

The issue of these Bond notes was authorised by the President Robert Mugabe on 07.11.2016 to tackle the shortage of cash in the country. The country spent more than it raised, much of it on imports causing the outflow of US$ out of the country. These new Bond notes were backed by US$200 million held in actual reserve when they were issued. To the locals, the nickname for the Bond note is called "Bollars". Interesting to note that Zimbabwe was once called the foods basket of Southern Africa.

Since the released of the Bond notes end of last year, the Bollars are loosing it's value. The local businesses are so worrying that as these new Bond notes have no value outside the country, it may lead to the drop in value. Some shops which are desperate for hard currency, are offering discounts on their goods, some up to 50% if payments are made by US$. Old habits die hard!

Signature: Governor Dr John Mangudya

Two Dollars (Bond Note)
Dated 2016, P99, Issued in November 2016
Five Dollars (Bond Note)
Dated 2016 (2017), P100
$2 - 5,000,000 pieces ($10,000,000) Issued on 28.11.2016;
$5 - 3,000,000 pieces ($15,000,000) Issued on 02.02.2017.

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