Tag: foreign exchange

Posted on by Richard

You Can’t Flee Zimbabwe – Government Out Of Money To Buy Passport Paper

There are certain bits of government that are actually necessary, there are certain things which simply must be imported to aid in doing those essential government actions. A good signal, symbol, of government falling into catastrophic disorder is when the trivial sums necessary to purchase such imports prevent those necessary things from being done.

There was an example of this under Mugabe. That 100 trillion Zim $ note we all make fun of. The only reason they didn’t carry on printing was because those notes weren’t worth enough to buy the ink necessary to print further notes.…

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Posted on by Tim Worstall

There Is No Shortage Of Forex In Zimbabwe – It’s Just The Wrong Price

Given Zimbabwe’s recent history it’s entirely remarkable that the government is still getting this wrong. Perhaps some people just need things explained again and again and again before they get it. For there is no shortage of foreign exchange in Zimbabwe. That’s not how the supply and demand of things works, especially not something as mobile as currency. No, what Zimbabwe has is the wrong price for foreign exchange. Which is pretty much the problem the place has had the last two times and third time isn’t going to be lucky unless the government grasps this now.…

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Posted on by Tim Worstall

Ethiopia’s Basic Problem, The Exchange Rate Is Too High – So Float it

We could say a lot of things abut the economy of Ethiopia – it takes time to recover from the imposition of idiot socialism for example. But even the most cursory of looks at these numbers will tell us what a basic problem is, the foreign exchange rate is too high. Thus the obvious solution – free the birr and see that problem disappear overnight.

As we’ve pointed out before there are all sorts of problems from getting this one price in the economy wrong:

It’s worth noting that an exchange rate which is too high – which is what that official rate is – is an artificial subsidy towards imports and away from domestic production.

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Posted on by Tim Worstall

Ethiopia’s FX Black Market – Why Not Just Free The Exchange Rate?

Ethiopia has been cracking down on the black market in foreign exchange in that country. A more sensible idea would be to simply move to a single free market foreign exchange rate – that in itself meaning simply free the market from the current restrictions.

The reason why not to do this is that it removes the privilege that the state sector – and thus all those who benefit from that sector, up to and including politicians – gains from the current controlled market.…

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