The economy of Zimbabwe is going through a tectonic shift as the country is witnessing a drastic change again in less than 11 years. The currency of Zimbabwe declined in 2008 due to hyperinflation. The people started to use South African Rand and US dollar instead.
Reportedly, in 2008 a loaf of bread cost trillions of Zimbabwe’s currency. This was a disastrous phase that drove the country back to the barter system of trade.
On Monday 1st July, the Reserve Bank of Zimbabwe removed US Dollar and South African Rand from its list of legal tenders. This is being done to promote the use of their native currency, the RTGS$ which will be termed as the Zimbabwe dollar. However, the citizens in the country seem unhappy with the decision.
Furthermore, this economic decision has had a considerable effect on Bitcoin prices in the country. One of bitcoin’s core value propositions is the ability to provide a store of value that is completely segregated from your local economy.
The reported price of Bitcoin in Zimbabwe was as high as $76000. This is 7.5 times higher than the rate in international markets. Hence, it opens up an opportunity for arbitrage. However, Before you book a flight for Harare and a 5-star hotel, please know that these figures are misleading.
This is primarily due to the demand to move from the USD. The Ecocash App is popular in Zimbabwe, which is used to hold the US Dollar. No doubt, after the government abruptly made trading in USD illegal, many locals will be trying to offload their EcoCash holdings in any way possible.
Hence, the demand is so high that there might be considerable margins imposed over it as well. While there is a significant difference in the price. But unless you have a contact at a Zimbabwean bank who can exchange EcoCash for USD at the rate of the day, the margins probably won’t be worth the trip.
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