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Africa
Zimbabwe revalues currency again
Dollar reduced by 12 zeros in attempt to fight hyperinflation and economic crisis.
Last Modified: 02 Feb 2009 16:27 GMT
Tsvangirai's opposition MDC is expected to finalise a unity government with Zanu-PF next week [AFP]

Zimbabwe's central bank has revalued its currency, reducing its dollar by 12 zeros in order to counter hyperinflation and economic degradation.

The move on Monday has turned one trillion dollars into one dollar, and brings with it seven new notes.

"The Central Bank unveils yet another programme through the removal of 12 zeros and the introduction of the following new currency denominations with immediate effect," Gideon Gono, the Reserve Bank governor, said.

The new denominations in the once prosperous nation are one, five, 10, 20, 50, 100 and 500 dollars.

"Yesterday's trillionaires, I am sorry, will not be able to buy their favourite drink today," Gono said.

Zimbabwe has an official inflation rate of 231 trillion and severe shortages of food and foreign exchange. The highest note previously was 10 trillion.

Price freeze sought

The central bank has revalued the currency before. In July, 10 zeros were knocked off the dollar and a six-month freeze on prices and salaries was requested.

Gono predicted that 2009 would mark a turning point with "rapid disinflation" and the easing of chronic food shortages.

"Unspoken voices of our citizens are sending a message that is clear: 'enough is enough'," he said.

Gono also said that some foreign exchange controls would be relaxed and gold producers can now sell bullion directly and not via the central bank as previously required.

Businesses were told that they could charge in foreign currency last month and Gono said they could now pay their staff in alien currencies.

Political deadlock

Robert Mugabe, the president, and Morgan Tsvangirai, the opposition leader, have been unable to finalise a power-sharing deal reached after disputed elections in March last year.

The distribution of positions within the government between Mugabe's Zanu-PF and Tsvangirai's Movement for Democratic Change (MDC) is the main point of dispute.

The MDC last week said that they would agree to form the coalition government next week, raising hope that the economy can be saved.

Zimbabwe's economy has been in crisis since Mugabe's heavily criticised land-redistribution programme which began at the start of the millennium, and took white-owned farmland into the ownership of the state.

Mugabe has said that economic sanctions by Western nations are responsible for the depression.

Source:
Agencies
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