In 1967 the Congolese franc was replaced by the zaire, a nonconvertible unit with a value of US$.50 to the zaire. This exchange rate held good until March 1976 when the zaire was revalued to Z1.1 to the SDR. A succession of devaluations in 1978, 1979, 1980, and 1981 temporarily gave the zaire a realistic value, but, because the fixed link with the SDR was retained, the black market quickly took over again as the principal market for exchange. A few exporters, notably Gécamines and other governmentowned companies as well as the offshore oil consortium, normally observed the official exchange rate, a policy that inevitably had an adverse impact on their cash flow because the local currency they were paid was considerably less than the real value of their foreign-exchange earnings.

The overvaluation of the zaire led to consistent shortages of hard currency at the official rate, making it difficult for local industries to import necessary inputs and spare parts. This limitation and restrictions on repatriating profits by overseas investors gave rise to a black market where the zaire sold at a fraction of its official value. For example, the parallel rate stood at five times the official rate in September 1983.

The parallel rate was the principal currency vehicle for business. Recorded diamond exports dropped sharply as smuggling offered a considerably higher profit margin than operating officially. Diamonds were sold at one point by nondiamond-producing Burundi. Coffee exporters were required to present their export documents to official channels in order to register their allocated percentage of Zaire's international coffee organization quota. However, it was common practice to ask bankers to deliver foreigncurrency receipts to another customer, who would then pay the exporter zaires at the parallel rate minus a commission. Some exporters simply smuggled coffee to neighboring countries. Access to limited and grossly undervalued foreign exchange depended on political and family connections. In this way, many members of the Zairian elite gained easy access to hard currency, as opposed to those Zairians and foreigners engaged in more entrepreneurial pursuits.

Throughout the early 1990s, the Zairian government accelerated its attempts to acquire hard currency and to control foreignexchange transactions. In October 1993, the regime required all Zairian exports to be paid for in advance in foreign currency. In addition, all incoming foreign exchange had to be "sold" to the central bank for domestic currency within forty-eight hours of receipt.

In terms of the United States dollar, the zaire has registered a dramatic decline in value since 1985, when Z50 equaled US$1, and 1986 when Z60 equaled US$1. The average annual value of the zaire per US$1 was registered as Z112 in 1987, Z187 in 1988, Z381 in 1989, and Z719 in 1990. The zaire was devalued in August 1991 in order to match the official exchange rate with the black-market rate, resulting in a new official rate of US$1 = Z15,300. But in 1992 the rate plummeted to US$1 = Z114,291 and continued to deteriorate. The official rate was Z1,990,89f 0,000 = US$1 by December 1992 (the average annual rate for 1992 was Z645,549 = US$1).

In January 1993, the regime attempted to introduce a new Z5 million note. But opposition forces denounced the move as inflationary and encouraged merchants to refuse to accept the note. When many of them did so, soldiers who had been paid in the notes went on a rampage, and extensive rioting and looting occurred. By March 1993, the exchange rate was Z2,529,000 = US$1.

In October 1993, the regime again attempted to resolve its chronic liquidity crisis by announcing the introduction of a new zaire (nouveau zaire--NZ), each supposed to be worth 3 million of the old zaire and set at an official rate of three new zaires to the United States dollar the old currency was to be withdrawn from circulation. The change had not been implemented by the end of 1993. The result of the announcement alone has, however, been a drastic plunge in the exchange rate in the black market and another surge in prices. The zaire traded against the United States dollar at a seemingly ridiculous rate of 8 million to one in October 1993 by December the rate was a patently absurd Z110 million to the dollar and still rising. Once again some rioting and looting occurred when opposition forces promoted a boycott of the new currency.

Data as of December 1993