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Zimbabwe devalues currency; 10 billion becomes 1 dollar

HARARE, Zimbabwe — Zimbabwe will drop 10 zeros from its hyper-inflated currency — turning 10 billion dollars into one dollar — as part of efforts to fight the effects of hyperinflation.



Central bank governor Gideon Gono announced he was dropping 10 zeros from the currency to turn 10 billion dollars into 1 dollar. Only last week, the government introduced the Z$100 billion note, but a 100 billion-dollar note that was not enough to buy a loaf of bread.

The latest currency announcement is another desperate attempt to stabilise Zimbabwe's collapsing economy. The high number of zeros constrained the operations of the country's computer systems, with computers, calculators and banks' cash machines not able to handle basic transactions in billions and trillions of dollars.

Inflation in Zimbabwe is officially running at more than 2000000% (Malaysia's inflation is about 7.7% in June 2008), but many analysts believe the true inflation figure is at least 9000000%.

A BBC reporter in Harare said that on the day he recently went shopping, a tray of 24 eggs went up from Z$375 billion to Z$600 billion. So far this year, Zimbabwe has been forced to print Z$100 million, Z$250 million and Z$500 million notes in rapid succession, now mostly worthless.

Shop shelves are empty and there are chronic shortages of everything including medication, food, fuel, power and water. 80% of the work force is unemployed and those with jobs do not earn enough to pay for bus fare to their work places.

33% of Zimbabweans have become economic and political refugees. Another 33% is dependent on foreign food aid. But President Mugabe barred non-governmental organizations from handing out food last month, claiming they were feeding only opposition supporters.

Mugabe has blamed profiteering and sanctions by the United States and the European Union (EU) for Zimbabwe's economic collapse.


SOURCES: http://ap.google.com/article/ALeqM5i4kT7pJlnuzY_vpKdTACcQYIPcvQD9286J480, http://news.bbc.co.uk/1/hi/world/africa/7532702.stm