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EDITIONS
Wednesday, 30 October, 2002, 16:28 GMT
Zimbabwe dollar plunges on black market
White farmers arrested by Zimbabwean police
The seizure of white-owned farms has hit exports
The Zimbabwean dollar has lost nearly half its value on the black market over the past two weeks, pushed down by the need of oil importers to pay off their foreign debts.

It now takes between 1,400 and 1,600 Zimbabwean dollars to buy one US dollar, well above a rate of 750 a fortnight ago. The official exchange rate is 55 to the US dollar.

Sorting tobacco in Zimbabwe
Tobacco exports are down 50%
Observers blame Zimbabwean oil importers for the sharp decline. The country imports oil worth about $360m (231m) a year, and oil traders are currently buying up all the dollars they can get to settle their debts.

This has weakened the Zimbabwean dollar, and will in turn force up the prices of both imported goods and all local products that depend on energy and transport.

Rampant inflation

In a country where about half the population is threatened with starvation, the added inflation will be felt particularly hard. Annual inflation is already running at nearly 140%.

Sharp drops in international aid, tourism to Zimbabwe and exports to western countries have all contributed to the dollar shortage.

Dwindling tobacco harvest
2000 - 237m kg
2001 - 202m kg
2002 - 162m kg
2003 forecast -
70-80m kg

Tobacco exports, once Zimbabwe's top earner of hard currency, have collapsed following the state-sanctioned seizure of white-owned commercial farms.

As a result Zimbabwe has a thriving black market for foreign currencies.

Even the government has tacitly acknowledged that its exchange rate is removed from reality.

Key exporters such as miners, tobacco growers and textile companies are offered rates well above the official 55 to the US dollar, to encourage them to repatriate their foreign currency earnings.


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13 Jul 02 | Country profiles
24 Oct 02 | Business
14 May 02 | Business
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