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Zimbabweans Suffer from Currency Depreciation, Soaring Inflation

Zimbabwe Cash Crunch
Zimbabwe Cash Crunch

Zimbabwean are now suffering from the depreciation of domestic currency and the high inflation rate, against the backdrop of global inflation.

Global food and energy prices have continued to soar, and so have prices in Zimbabwe. In addition, the U.S. Federal Reserve's continuous aggressive interest rate hikes have led to a sharp depreciation of the Zimbabwean currency against the U.S. dollar. This has directly pushed up the prices of imported goods and further intensified inflationary pressure in the country.

At a large chain supermarket in the capital city of Harare, a bag of 10-kilogram corn flour is sold for 8,290 new Zimbabwean dollars (about 9.52 U.S. dollars), nearly nine times that of the 929 new Zimbabwean dollars asked at the same time last year.

"Inflation is the No. 1 enemy of any consumer, because as it is right now, I can't afford any genuine standard of living," said a local resident.

The official exchange rate of the Zimbabwean currency against the U.S. dollar was 124 to 1 at the end of last February, while it became 871 to 1 on Monday, according to the website of the Reserve Bank of Zimbabwe, the central bank of the African country.

Due to the continuous depreciation of domestic currency, many Zimbabweans have turned to the black market for foreign currency exchange, where the exchange rate between the Zimbabwean dollar and the U.S. dollar is as high as 1,200 to 1.

In response, the central bank has successively issued various gold coins to the market for residents to purchase since last July. These coins can be used as a means of value maintenance, while helping remove excess liquidity from the market.

The gold coins put on the market are gradually taking effect, stabilizing the violently fluctuating exchange rate of the Zimbabwean currency against foreign currencies. Also, the inflation rate in the African country has seen a month-on-month decline since the end of last year.