The suffering people of Zimbabwe are responding rationally to hyperinflation, conducting transactions in anything but Zimbabwean dollars:
Zimbabweans spend their local dollars as fast as possible or change them into hard currency on the black market. A parallel system is thriving in back offices and parking lots. Ronald was a civil servant but became a money dealer about a year ago to feed his family. He now makes about $100 a month, whereas his former colleagues earn the equivalent of less than $2 a month, enough to buy two loaves of bread. On a recent trip, this correspondent changed money from a central-bank employee running an illegal foreign-exchange business in his own office.
With a strict daily limit (currently less than $1.40) on bank withdrawals, people shun banks as much as possible and are returning to a cash economy. Petrol and rents are now charged mainly in American dollars or South African rand, but since some landlords have been taken to court, rents are increasingly often paid for in groceries. People buying overpriced cooking oil or sugar on the black market, since those items have long vanished from shops due to official price controls, are charged more if they pay in local dollars. Petrol coupons have become a virtual currency.
John Robertson, a local economist, reckons that the informal economy has probably become larger than the formal one. Though estimates are fuzzy, he believes that money sent by Zimbabweans abroad to friends and relatives at home, which used barely to register on Zimbabwe’s foreign-exchange radar screen, now accounts for probably a third or so of the country’s foreign-exchange inflows.
Turning to foreign exchange or barter is what you would expect in countries that have had inflation of more than a few hundred per cent a year. At the height of its inflation crisis, shops in Argentina were no longer able to price their goods. In some cases, Peruvians started using lavatory paper, then in short supply, as currency.
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