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Revaluation cuts 10 zeroes off Zimbabwe dollar
"The Reserve Bank of Zimbabwe yesterday lopped 10 zeroes off the value of the Zimbabwe dollar, thereby revaluing Z$10bn of existing currency to one Zimbabwe dollar from tomorrow.
Gideon Gono, central bank governor, said the revaluation was necessary to 'address cash constraints in the payments system' as well as "challenges" to financial and accounting IT systems caused by the proliferation of zeroes.
Independent estimates put Zimbabwe's inflation rate well above the official 2.2m per cent - the world's highest. The economic crisis has been blamed on President Robert Mugabe's policies, whichhave led to shortages of food and foreign currency.
While bankers and economists welcomed the move, one warned it was 'a Band-Aid that will ease the currency crisis for a few months and no more'."
(End of excerpt)
Full article at link by Tony Hawkins// Financial Times
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http://creativecommons.org/licenses/by-sa/2.0/deed.en "The Reserve Bank of Zimbabwe yesterday lopped 10 zeroes off the value of the Zimbabwe dollar, thereby revaluing Z$10bn of existi... more -
Zimbabwe: Inflation 'highest in the world'
Official inflation soared to 2.2 million percent in Zimbabwe -- by far the highest in the world -- and has shot as high as 70 million percent in the past year for some basic goods sold on the black market, the state central bank said Thursday.
Worsening shortages of basic goods, and the deadly political and economic turmoil surrounding the national elections March 29 and a disputed presidential runoff vote June 27, helped spur the spike in inflation in recent months.
The last announcement of official annual inflation, in February, put the rate at 165,000 percent.
Zimbabwe Reserve Bank Governor Gideon Gono announced the new figure at the launch of a program to sell subsidized food through selected shops and a system of coupons issued to the needy, state radio reported Thursday.
The central bank also released a schedule showing what it called distortions in prices caused by black market trading and profiteering by businesses.
It said laundry soap on the black market went up by 70 million percent, cooking oil by 60 million percent and sugar by 36 million percent -- far higher than the official inflation rate of 2.2 million percent calculated by the Central Statistical Office on basic goods subject to price regulation and price increases approved by state National Prices and Incomes Commission.
It acknowledged that private consultants calculated overall real inflation closer to 12.5 million percent. The bank attributed black market inflation to shortages of hard currency that pushed the black market exchange rate to at least 90 billion Zimbabwe dollars for a single U.S. dollar, compared to the official bank exchange of 20 billion to US$1.
It said a 4-pound (2-kilogram) bag of sugar cost about 20 billion Zimbabwe dollars ($1) at the government's fixed price, and 90 billion on the black market ($1 at the black market exchange or $4.50 at the bank exchange rate.)
In the economic meltdown, unemployment has reached 80 percent and unskilled workers still in jobs earn up to $10 a month.
The price of scarce gasoline has soared, along with commuter bus fares that often exceed monthly earnings, forcing workers to walk to their jobs, or sell vegetables and other goods on the streets to make up the shortfall.
The economy was a key concern in the first round of presidential voting March 29, when opposition leader Morgan Tsvangirai beat longtime leader Robert Mugabe and two other candidates but did not win the 50 percent plus one vote necessary to avoid a runoff.
Tsvangirai later pulled out of the runoff because of a campaign of violence against his supporters. Mugabe went ahead with a June 27 vote widely denounced as a sham. Tsvangirai's name was kept on the ballot and Mugabe was declared the overwhelming winner.
Launching the subsidized food program on Wednesday, Mugabe said basic commodities subsidized by the central bank were to be distributed across the country, enabling an average family to pay just 100 billion Zimbabwe dollars (US$5) for a basket of items -- including cooking oil, the cornmeal staple, flour and soap -- that would last a month.
At present, a single loaf of bread costs nearly 100 billion Zimbabwe dollars.
It was not immediately clear how the central bank would finance the subsidies, with health and other public services already facing collapse because of lack of state funding. Official inflation soared to 2.2 million percent in Zimbabwe -- by far the highest in the world -- and has shot as high as 70 million ... more -
Zimbabwe inflation now over 1 million percent
Weary Zimbabweans are facing a new wave of price increases that will put many basic goods even further out of their reach: a loaf of bread now costs what 12 new cars did a decade ago.
22 May 2008- ANGUS SHAW (Associated Press)
(AP Photo/Tsvangirayi Mukwazhi)
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Full story at link. Weary Zimbabweans are facing a new wave of price increases that will put many basic goods even further out of their reach: a loaf of ... more -
Zimbabwe bank issues $500m note
The central bank has issued a 500m Zimbabwe dollar banknote, worth US$2, to try to ease cash shortages amid the world's highest rate of inflation.
The previous highest denomination note was for Z$250m, issued 10 days ago.
Meanwhile, the opposition has rejected the move to delay the presidential run-off, possibly until July, saying it was a government ploy to stay in power.
It called for an emergency regional summit, urging neighbouring countries to take "firm resolutions".
Movement for Democratic Change (MDC) leader Morgan Tsvangirai gained more votes than President Robert Mugabe in the first round on 29 March, but did not pass the 50% threshold to be elected, according to the official results.
"We would like to express our great outrage at that disregard of Zimbabwe's laws and the people's will," MDC Secretary General Tendai Biti told a news conference in South Africa.
In a statement, he said the Southern African Development Community (Sadc) should "take note of the massacres taking place in the country".
Meanwhile, an election observer group has appealed for clothing, bedding and food for monitors affected by the violence.
The Zimbabwe Election Support Network deployed 8,000 monitors for the March polls and says some of its members have been assaulted and had their homes burnt down, with new cases daily.
Zimbabwe's annual inflation rate is 165,000% and one economist said prices now double every week.
'Survive'
"Prices are now doubling every week instead of every month and it is hard to see how we can survive to the end of June or how an election will be feasible at all if things continue to deteriorate at this pace," said Harare economist John Robertson, according to the AP news agency.
This is the fourth set of new banknotes to be introduced this year.
At independence in 1980, one Zimbabwe dollar was worth more than US$1.
Just one in five of the adult population is believed to have a formal job and some three million people have left the country for a new life in South Africa.
The economy has been in trouble for several years, with supplies of basic foodstuffs, cooking oil and petrol all running low.
The government has also suspended import duty on some basic goods, such as cooking oil, rice and soap in a bid to counter inflation.
The run-off was due to be held by 23 May - 21 days after the results of the first round were announced - but the government has issued an emergency law to give it 90 days to organise the new poll.
The Zimbabwe Electoral Commission (Zec) said it was not possible to hold the run-off so quickly. The central bank has issued a 500m Zimbabwe dollar banknote, worth US$2, to try to ease cash shortages amid the world's highest r... more -
Zimbabwe - How much does a newpaper cost?
This is one of the most eye opening articles on Zimbabwe I have read...
Published on The Independent online Sunday, 20 April 2008
To the casual visitor, which is what I was pretending to be in Zimbabwe, the country does not immediately appear like an impoverished autocracy. It is quite possible to drive around Harare and Bulawayo, the country's two main cities, without encountering a roadblock or seeing unusual numbers of policemen. There are potholes in the roads, sure, but unlike many parts of Africa, a 4x4 vehicle is not essential in urban areas. And at traffic lights, most of which still work, there are people selling newspapers that condemn President Robert Mugabe in the roundest of terms.
But then you notice the price of one of these papers – the weekly Zimbabwe Independent – and any semblance of normality is dispelled. The current issue costs 85 million Zimbabwean dollars, up from Z$55m last week. This Friday the vendors will probably want more than $100m.
While much of Zimbabwe's political life under Mugabe consists of pure illusion – the President blames British colonialism for anything that goes wrong, and acts as though the election defeat three weeks ago simply did not happen – nobody can escape the reality of the world's worst inflation rate. Even the Zimbabwean authorities admit it is in the region of 160,000 per cent, but independent economists believe it could be more than twice that level.
A bag of bananas costs Z$150m; a loaf Z$300m. At least, they did a couple of days ago. One housewife said she was buying groceries recently for Z$100m when there was a hitch with her cheque guarantee card. By the time she returned from sorting it out at the supervisor's desk, her bill had gone up to Z$250m. The widow of a man who worked all his life for the postal service gets a pension of Z$1,295 a month: not enough for a box of matches – possibly not even one match. A note smaller than Z$10m is small change, and anything below one million is simply scrap paper.
In most basket-case economies, paper bills are sweat-stained and rubbed to near-illegibility. Not in Zimbabwe, where the central bank's presses keep churning out crisp new notes in ever-higher denominations. The Z$50m note is a popular innovation – considerably more so than the $750,000 bill, introduced a few thousand per cent ago, which made calculations difficult – but many believe it is only government pride which is delaying the Z$100m note. Even then, Zimbabweans will have to carry sharp-edged bricks of new notes for all but the most trivial of transactions. The struggle to keep up with soaring prices – those with bank accounts can withdraw only the equivalent of a pound or two a day from the few cash machines, and often have to queue for more than a hour to do so – has driven many half-way out of the cash economy.
Above the high walls of Harare's smart northern suburbs, maize stalks often wave. Few people can afford not to grow their own food, and lawns and flowerbeds have been ploughed up for kitchen gardens. Joseph Massundah, 70, a former senior civil servant, is part of the generation that came into its own after independence in 1980. Government loans helped him buy a three-bedroom bungalow in the city's Mount Pleasant area, and both his daughters received the best education. But his pension has been drastically eroded. How does he cope?
Click the link to read the rest of the story.
http://www.independent.co.uk/news/world/africa/the-z500... This is one of the most eye opening articles on Zimbabwe I have read... Published on The Independent online Sunday, 20 April 2008 ... more -
Fool's Gold - by Michael Fox
In an excellent column on the state of the dollar, Brother, Can you Spare $10,000, economist Peter Schiff writes that
“…Bernanke blames the [Great] Depression on the Fed not printing enough money. Had the Fed done precisely what Bernanke now thinks they should have, the Great Depression would have been much worse. Had the Fed tried to re-inflate the stock market bubble or keep it from bursting in the first place, it's the dollar that would have collapsed, and Depression-era America would have looked liked Weimar Republic Germany. As bad as the Great Depression was, hyperinflation would have made it even worse.The good news is that there is still time to alter course and steer clear of both hyper-inflation and depression. The bad news is that if we remain on our current course that is precisely where we will end up.” In an excellent column on the state of the dollar, Brother, Can you Spare $10,000, economist Peter Schiff writes that ... more
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