Precursors to hyperinflation (Part 3)

The breakdown in the relationship with Zimbabwe’s funders was the forerunner of a market collapse. Brewing investor distrust boiled to panic point. On Friday, 14 Nov 1997, the Zimbabwe dollar plummeted, losing 75% of its value in one day.

That day, known as Black Friday, was a definitive turning point. Years of complacent mismanagement found expression in one panic-stricken moment. It triggered a continued fall in the value of the currency and the Zimbabwe dollar was never to recover.

With the spectacular drop in the value of the Zimbabwe dollar, the cost of the country’s imports soared overnight, which required much more foreign currency, already scarce with the international loans being withdrawn. The currency continued to plummet.

The country would have many subsequent crashes as it spun down its debt and money printing vortex. In 2000, there was a major contraction from a land confiscation & redistribution project. In 2003, a major banking crisis. Crisis after crisis followed as money printing escalated.

Black Friday exposed a harsh reality: the emperor had no clothes. Lenders could now see how exposed Zimbabwe really was, facing the threat of bankruptcy. https://www.amazon.com/dp/0620590033/ref=cm_sw_r_wa_apa_fab_TnoBFb28YXGDJ

Black Friday was economically catastrophic. One woman who owned an import business in Zimbabwe at the time said this:

"I remember the crash like it was yesterday – it was a Friday morning in the middle of spring. our purchasing manager rushed through to tell me the news.

I was in meetings for the rest of the day and he came through five or six times to give updates on how far the currency value had fallen.

We ran a small business in printing and we imported all our branding and technology to sell locally.

Our input costs were based in US dollars and the crash practically destroyed our business. The exchange rate kept on getting worse and worse. From then on, everything changed. We eventually had to close up shop."