RBZ slashes 10 zeros, to issue new currency

RBZ slashes 10 zeros, to issue new currency

MEASURES: REserve Bank governor Gideon Gono to knock off 10 zeros from Zimbabwe'c currency

• Mugabe attacks Britain as inflation hits 2,2m percent

• Zimbabwe's currency takes new plunge

• Zimbabwe launches new Z$500 million bank note

• RBZ unveils Z$250m bank note

• Cash shortages on first day of currency floatation

• Dollar firms after RBZ currency floatation

• RBZ eases foreign exchange rules

• Inflation soars to 165000%

ZIMBABWE'S central bank governor says he is knocking 10 zeros off the country's hyper-inflated currency to make 10 billion dollars become one dollar.

Zimbabwe suffers the highest inflation rate in the world. Governor Gideon Gono says that high rate is constraining operations of the country's computer systems. Computers, electronic calculators and automated teller machines at banks have not been able to handle basic transactions in billions and trillions of dollars.

Just last week Gono introduced a new 100 billion-dollar note that is not enough to buy a loaf of bread.

Gono says the new rate goes into effect on Aug. 1 with the issue of a 500-dollar bill equivalent to 5 trillion dollars at the current rate.

President Robert Mugabe warned the country's business sector to stop profiteering or face emergency measures in a televised address that followed Gono's announcement.

"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," Mugabe said.

Once the beacon of southern Africa, Zimbabwe now has the world's highest inflation rate -- officially above two million percent but widely seen much higher.

Critics blame this and other economic woes -- including chronic shortages of food and other basic commodities -- on mismanagement by President Robert Mugabe's government.

Zimbabwe lopped off three zeros from its currency in August 2006, and financial accounts and prices were adjusted according, but hyperinflation has since forced the central bank to keep issuing higher-denomination notes, piling back the zeros.

At the beginning of the year, the largest bank note was worth Z$10 million, but it has now lost its value and is commonly found strewn on the capital Harare's streets, rejected by both street vendors and beggars alike.

On Thursday last week, one U.S. dollar fetched 45 billion Zimbabwe dollars on the official market, but was worth as much as 100 billion Zimbabwe dollars on a thriving black market fuelled by acute foreign currency shortages.

Zimbabwe's trade union federation ZCTU wrote a letter to Gono last week, asking him to relax limits on cash withdrawals from bank accounts.

The ZCTU said the existing maximum cash withdrawal limit of 100 billion Zimbabwe dollars was not enough for urban workers whose daily public transport costs alone amount to about 150 billion Zimbabwe dollars. -- AP/Reuters

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