Venezuela now weighs cash and Zimbabwe to introduce new currency..

These two countries Venezuela and Zimbabwe are classic cases of monetary mismanagement of this century.

In a recent article, Venezuela now weighs currency rather than count the same.

At a delicatessen counter in eastern Caracas, Humberto Gonzalez removes slices of salty white cheese from his scale and replaces them with a stack of bolivar notes handed over by his customer. The currency is so devalued and each purchase requires so many bills that instead of counting, he weighs them.

“It’s sad,” Gonzalez says. “At this point, I think the cheese is worth more.”

It’s also one of the clearest signs yet that hyperinflation could be taking hold in a country that refuses to publish consumer-price data on a regular basis. Cash-weighing isn’t seen everywhere but is increasing, echoing scenes from some of the past century’s most-chaotic hyperinflation episodes: Post-World War I Germany, Yugoslavia in the 1990s and Zimbabwe a decade ago.

 “When they start weighing cash, it’s a sign of runaway inflation,” said Jesus Casique, financial director of Capital Market Finance, a consulting firm. “But Venezuelans don’t know just how bad it is because the government refuses to publish figures.”

Zimbabwe on the other hand, plans to introduce a new currency.  It will be backed by a bond and trade at par with US Dollar:

Zimbabwe’s president has formalized a law allowing the introduction of a new currency this month.  The new bond notes, backed by a $200 million Afreximbank bond facility, will be regarded as legal tender for all local transactions.

 This southern African nation abandoned its own currency in 2009 after inflation hit 231 million per cent, according to government figures. It has been using a multi-currency system dominated by the US dollar since then.  
Severe cash shortages that the Reserve Bank of Zimbabwe attributes to low exports have hit this once-prosperous country in recent months. The bank says the bond notes to be introduced on an unspecified date this month will trade at par with the US dollar.
How difficult it has been to understand the basic lessons of money for some of the countries…

One Response to “Venezuela now weighs cash and Zimbabwe to introduce new currency..”

  1. Venezuela now weighs cash and Zimbabwe to introduce new currency.. - Zimbabwe Consolidated News Says:

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