Page last updated at 14:11 GMT, Wednesday, 30 July 2008 15:11 UK

Zimbabwe to revalue its currency

Bank governor Gideon Gono announces plans to overhaul Zimbabwe's currency

Zimbabwe's central bank has said it will revalue its currency on 1 August as part of efforts to fight the effects of hyperinflation.

The bank's governor, Gideon Gono, has announced 10 zeros will be lopped off the Zimbabwe dollar, making 10bn dollars now equal to one dollar.

Only last week, the government introduced the Z$100bn note.

South Africa's Thabo Mbeki is visiting Harare after crisis talks between government and opposition were halted.

He will meet President Robert Mugabe, whom the opposition Movement for Democratic Change (MDC) have accused of stealing the election earlier this year.

We would like to see the speedy conclusion of the talks... so that we can focus in the future our attention around our economy
President Robert Mugabe

Mr Mugabe said he wanted the talks to succeed but warned that "sometimes compromise is difficult".

The BBC's Peter Biles in Johannesburg says it has emerged that President Mbeki held a meeting in the South African capital, Pretoria, on Tuesday with the MDC's Morgan Tsvangirai.

Mr Mbeki, the lead mediator on the Zimbabwe crisis, has said the two sides are determined to reach an agreement within a two-week time-frame at the talks in a secret location near Pretoria.

But opposition sources said the talks have reached deadlock.

Emergency threat

After the currency announcement, Mr Mugabe warned the country's businessmen in a televised address to stop profiteering or face emergency measures.

"If you drive us more than you have done we will impose emergency measures, and we don't want to place our country in a situation of emergency rules, they can be tough rules you know," Reuters news agency reports him as saying.

Mr Mugabe blames Zimbabwe's economic problems on white businessmen and Western sanctions, rather than his own policies.

The latest currency announcement is another desperate attempt by Mr Gono to stabilise Zimbabwe's collapsing economy, our correspondent says.

"The Zimbabwe dollar will be redenominated by a factor of one to 10, which means we are removing 10 zeros from our monetary value. Ten billion dollars today will be reduced to Z$1... effective from 1 August," Mr Gono said in a television broadcast.


The BBC's Andrew Harding goes food shopping in Harare.

The high rate constrained the operations of the country's computer systems, with computers, calculators and banks' cash machines not able to handle transactions in billions and trillions of dollars, he added.

The new Z$100bn (under $2, 1) note introduced last week is not enough to buy a loaf of bread.

Inflation is officially running at more than 2,000,000%, but many analysts believe the true inflation figure is at least 9,000,000%.

A BBC reporter in Harare said that on the day he recently went shopping, a tray of 24 eggs went up from Z$375bn to Z$600bn.

What MDC wants:
Mugabe to step down
"Transitional authority" to organise new elections
What Zanu-PF wants:
Mugabe to be accepted as president
MDC to take a few minor ministries
International community to drop sanctions and help kick-start economy

So far this year, Zimbabwe has been forced to print Z$100m, Z$250m and Z$500m notes in rapid succession, now mostly worthless.

Mr Mugabe said he would like a speedy conclusion to talks with the MDC so "we can focus in the future our attention around our economy", AFP news agency reports.

The negotiations began last week after Mr Mugabe and Mr Tsvangirai met for the first time in a decade.

Mr Tsvangirai pushed Mr Mugabe into second place in the first round of voting on 29 March but he pulled out of a 27 June run-off election after a wave of deadly attacks against his supporters.

The MDC says that more than 120 of its supporters have been killed, some 5,000 abducted and 200,000 forced to flee their homes after being attacked by ruling Zanu-PF militias and security agents.

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