The Price Of One Bitcoin Costing around $10,000 In Zimbabwe

Just when people around the world can’t stop gushing about the Bitcoin price toppling over the $6000 mark, Zimbabwe is ready to shell out a whopping $9600 for One Bitcoin. Welcome to Zimbabwe, where Bitcoin is soon becoming an unofficial legal tender powered by the acute liquidity crisis and payment challenges.

Bitcoin Price reached a record high figure of $10,000 in the beginning of October given the worsening economy of Zimbabwe which the government is toiling had to turn around. Bitcoin traded at $9600 on 23^rd October at the Golix Exchange platform powered by the cash crunch which is threatening to handicap all trading activities both within and outside the country. In such a scenario, the Bitcoin medium has come as a boon for those who are especially engaged in working with foreign currency transactions.

In the month of September, when price of 1 Bitcoin was hovering around $3500-$4000 everywhere, the Bitcoin price in Zimbabwe was standing at $7200, trading 85% higher.

Yeukai Kusangaya, a trade coordinator at Golix Bitcoin exchange in Zimbabwe recently told Quartz that:

“There is currently more demand than supply of bitcoins. Interest in bitcoin has peaked as people cannot send money outside or pay for international transactions using formal banks. People have had to look for alternatives and bitcoin has been a useful solution which can be used to purchase goods on Amazon or to pay for vehicles from international suppliers and traders.”

The Reserve Bank of Zimbabwe has been struggling with the bank note shortages lately thus printing bond notes which are Zimbabwe’s indigenous version of US Dollars. Such notes are supposed to hold a value equivalent to greenback but in reality are been traded at 30% premium when compared to the US dollar on corresponding markets.

The Reserve Bank of Zimbabwe (RBZ) has coerced individual traders and importers into mobilising foreign currency by their own means, “mostly on the parallel markets as the central bank is failing to effect payments to international suppliers and creditors and this has stoked up inflation, say economists”.

On 16^th October, Zimstats said that, “the year on year inflation rate for the month of September 2017 as measured by the all items Consumer Price Index (CPI) stood at 0.78 percent, gaining 0.64 percent” given August 2017’s inflation rate of 0.14%.

Such a cash strapped situation have resulted in shortages of cooking oil and rising price of foodstuffs and other household commodities as manufacturers are not being able to complete timely payment of raw materials and retailers are rejecting alternative payment means such as plastic money and mobile money. Zimbabwe has also imposed a ban on import of fresh fruits and vegetables since it feels that this is a means of wasting scarce foreign currency resources. Local producers have issued a warning that this might cause shortages of pears, apples and similar fruits which are not produced in bulk locally.

The government run by President Robert Mugabe’s stated that it is working hard to make the economy turn around but have blamed social media for spreading false rumours which falsely inflame commodity shortages and distort exchange rates. For helping the country in generating more foreign exchange earnings, the central bank has started offering lucrative incentives ranging from 5-12% on export receipts however the level of respite this will bring along is highly questionable.

The Zimbabwe Independent newspaper described the situation as having a, “debilitating liquidity crunch and an acute cash shortage,” which has “severely crippled companies which need to import critical inputs for operations.”

Also read: Hedge Fund Legend Says Bitcoin Price May Touch $10,000 By April 2018

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