Page last updated at 15:11 GMT, Monday, 2 February 2009

Zimbabwe dollar sheds 12 zeros

Z$500 million note
Notes valued at millions of Zimbabwe dollars have been virtually worthless

Zimbabwe is revaluing its dollar again, removing twelve zeros from the currency with immediate effect.

The country's central bank is introducing seven new notes in an effort to stave off economic collapse.

The country is in the grip of world-record hyperinflation. The most recent estimate in July 2008 put it at 231m%.

Only last month, a Z$100 trillion note was introduced and the government moved to allow people to use foreign currencies alongside Zimbabwe's dollar.

The announcement will see Z$1 trillion reduced to Z$1.

The denominations of the new notes are Z$1, Z$5, Z$10, Z$20, Z$50, Z$100 and Z$500.

The governor of the Reserve Bank of Zimbabwe, Gideon Gono, said: "Yesterday's trillionaires, I am sorry, will not be able to buy their favourite drink today," according to the AFP news agency.

Mr Gono gave no updated inflation figures.

Given the choice of multiple currencies, who would want to trade in Zimbabwe dollars?
John Robertson
Harare-based economist
Last year, the central bank was forced to take 10 zeros from the local unit in an effort to make the currency more manageable, but the zeros returned within a few months.

On Sunday, US$1 (0.71) was equal to Z$3 or Z$4 trillion.

In a separate bid to tackle inflation, the government last month allowed businesses to charge in foreign currencies and said those businesses could pay their workers in foreign currency.

Until then, only licensed businesses could accept foreign currencies, although it was common practice.

The government added that the country's stock exchange, which has not traded for two months, would also be licensed to trade in foreign currency, once listed firms and the exchange provide evaluation criteria.

Humanitarian crisis

John Robertson, a leading Harare-based economist, said Mr Gono's latest statement contained some positive measures but did not go far enough.

"It would appear he is trying to restore the Zimbabwean dollar, but, given the choice of multiple currencies, who would want to trade in Zimbabwe dollars?" he told the Reuters news agency.

Zimbabwe is also facing a deepening humanitarian crisis.

A cholera outbreak has killed more than 3,000 people, according to the World Health Organization.

And the World Food Programme says seven million Zimbabweans are in need of food aid, up from 5.1 million in June.

The country's situation has been worsened by the political crisis that resulted from last year's disputed presidential elections.

But last week, Zimbabwe's opposition leader Morgan Tsvangirai said his party would join a unity government with President Robert Mugabe's Zanu-PF.

After the announcement, former UN Secretary-General Kofi Annan led calls for world leaders to help rebuild Zimbabwe's economy.

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