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Thread: Why did Zimbabwe print 100 trillion dollars in denominations?

  1. #11 You can automatically minimize the read posts in your account in the 'Forum Settings'
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    Quote Originally Posted by Caprice     
    Yeah I have noticed that too. But I don't know why some countries have such lower valued currencies. These include Vietnam, Indonesia and a bunch of other countries. Their currency's value is extremely low with no signs of an increase. Despite this, those countries have good/stable economies.
    I don't think these countries have currencies which are at such low levels from the start. They started well at higher levels but eventually devalued to the point that they were almost worthless and countries had to print higher denominations. I think prolonged economic uncertainty and downfall results in that.

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    Quote Originally Posted by Greta     
    I don't think these countries have currencies which are at such low levels from the start. They started well at higher levels but eventually devalued to the point that they were almost worthless and countries had to print higher denominations. I think prolonged economic uncertainty and downfall results in that.
    Yeah, I never understood this. Why do some currencies have almost lost all their values over the years and have gone down to such low levels that they had to print very high denominations just to manage the currency flow, while other currencies have retained or gained value over the past decade or so. I think they were all initially pegged or standardized against the USD.

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    Quote Originally Posted by Caprice     
    Yeah, I never understood this. Why do some currencies have almost lost all their values over the years and have gone down to such low levels that they had to print very high denominations just to manage the currency flow, while other currencies have retained or gained value over the past decade or so. I think they were all initially pegged or standardized against the USD.
    I think corruption, lack of foreign remittance, reduction in USD reserves are all major factors impacting the currency value there. Not sure why though only Zimbabwean dollar fell that much. There might be reason for that actually. Would be thankful if someone shares the actual reasoning.

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    Quote Originally Posted by Dinara     
    I think corruption, lack of foreign remittance, reduction in USD reserves are all major factors impacting the currency value there. Not sure why though only Zimbabwean dollar fell that much. There might be reason for that actually. Would be thankful if someone shares the actual reasoning.
    I think the primary factor is reduction in USD reserves as that ensures the currency value is stable and maintained. If the reserves fall down to a particular level, country can't service its foreign debts or pay for imports. This results in further devaluation. Its like a non-stop spiral.

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    Quote Originally Posted by Greta     
    I think the primary factor is reduction in USD reserves as that ensures the currency value is stable and maintained. If the reserves fall down to a particular level, country can't service its foreign debts or pay for imports. This results in further devaluation. Its like a non-stop spiral.
    Yeah, significant reduction in the USD and gold reserves within the currency can result in such significant devaluation but there are many factors which influence this to be honest. I think remittances is one of the key factors in this. Drop in remittances suddenly throws everything out of balance as the import demand stays at the same level so country has to pay the same amount of USD but the incoming quantity of USD isn't the same.

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    Quote Originally Posted by Caprice     
    Yeah, significant reduction in the USD and gold reserves within the currency can result in such significant devaluation but there are many factors which influence this to be honest. I think remittances is one of the key factors in this. Drop in remittances suddenly throws everything out of balance as the import demand stays at the same level so country has to pay the same amount of USD but the incoming quantity of USD isn't the same.
    Thank you for the wonderful explanation. Looks like you know a lot about how reserves of a country work and how USD stores affect the country's currency value. Correct me if I am wrong but I don't think all countries rely on remittances for their currency to maintain its value. Its the countries which send most of their people outside for work rely on that.

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    Quote Originally Posted by Greta     
    Thank you for the wonderful explanation. Looks like you know a lot about how reserves of a country work and how USD stores affect the country's currency value. Correct me if I am wrong but I don't think all countries rely on remittances for their currency to maintain its value. Its the countries which send most of their people outside for work rely on that.
    Yes Greta, you are right. Its those countries which have a large expatriate population living overseas. Countries like that rely heavily on the foreign remittances that they receive to create the balance between the outgoing foreign reserves for import payments and the influx of foreign currency overall.

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