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Working Paper - 210 - The Real Exchange Rate and Growth in Zimbabwe Does the Currency Regime Matter


After its economy collapsed in 2008, Zimbabwe opted for a multicurrency regime anchored in US$.4 The objective was to stabilize the economy and establish a credible nominal anchor.5 The replacement of the Zimbabwean dollar by the multicurrency system brought the hyperinflation and the currency devaluation to a halt, laying foundations for economic recovery. The average annual inflation during 2009 – 2013 was 3.3 percent, while the real GDP grew on average more than 8 percent a year. While it may be tempting to consider these outcomes a success, a closer look at the overall economic performance reveals a number of challenges and open issues.

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