Bitcoin climbed as much as 10% on Zimbabwe’s Golix exchange on Wednesday after the country’s armed forces seized power.
The price of the crypto-currency in the country jumped as high as $13,499, almost double the rate at which it trades in international markets, according to prices cited on Golix’s website. It traded at $13,010 by 3.34pm in Harare.
Demand for bitcoin in Zimbabwe has surged amid a shortage of hard currency. Golix processed more than $1m of transactions in the past 30 days, compared with turnover of $100,000 for the whole of 2016, according to data on the exchange’s website.
Zimbabwe doesn’t have its own currency, with the government adopting the US dollar and the rand, among others, as legal tender in 2009 after hyper-inflation rendered the local dollar worthless.
Golix, an unregulated platform that also trades other crypto-currencies including bitcoin cash, has been in operation since 2014. Prices for bitcoin are set by supply and demand, according to Taurai Chinyamakobvu, co-owner of the exchange. Sellers are paid in US dollars deposited electronically, which can only be converted into hard cash at a steep discount on the black market.
Zimbabwe’s army moved into the capital, Harare, on Tuesday after a week of confrontation with President Robert Mugabe’s government, saying the action was needed to stave off violent conflict in the country he has ruled since 1980.
The events are unfolding as Zimbabwe is in deep crisis. The economy has halved since 2000, an estimated 95% of the workforce is jobless, and as many as 3-million Zimbabweans have gone into exile.
While most major currencies are legal tender in Zimbabwe, cash-strapped importers and retailers buy dollars — or any currency easily converted to dollars — at premium prices by paying the seller electronically. An "electronic" dollar buys about R8, compared with the market exchange rate of R14.32 on Wednesday.
Zimbabwe’s unpopular "bond notes" — promissory notes issued by the central bank and officially pegged to the dollar — are worth as little as 50 US cents on the black market.
Bloomberg
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