Zimbabwe retailers to peg prices in foreign currency

Zimbabwe retailers to peg prices in foreign currency - central bank

EXPERIMENT: RBZ governor Gideon Gono

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ZIMBABWE said on Wednesday it will license shops to sell goods in foreign currency to help ease shortages, the clearest sign authorities are losing the battle against a thriving black market.

Central bank Governor Gideon Gono said 1 000 retailers and 200 wholesalers will be allowed to sell in foreign money, while motorists could also buy fuel in foreign currency.

"With immediate effect there will be foreign currency licensed warehouses and shops and we are doing this for an initial period of 18 months, as an experiment," he told reporters.

The most used foreign currencies in Zimbabwe are the South African rand and the US dollar.

Zimbabwe is suffering a political crisis and economic meltdown, with inflation running at more than 11 million percent and unemployment at about 80%.

Basic goods are scarce and the central bank has repeatedly re-denominated the Zimbabwe dollar to try keep up with inflation.

In its latest move it lopped off 10 zeros on August 1 to help bring relief to consumers forced to carry large bags of money to buy everyday goods.

But while the official rate to the US dollar stands at 60, the black market rate has plunged to 2 000 to the greenback.

Analysts say the economy is unlikely to rebound until a post-election crisis is resolved. President Robert Mugabe and opposition MDC leader Morgan Tsvangirai are in talks to forge a new all-inclusive government after a disputed election.

Gono said manufacturers could sell to the licensed shops in foreign currency, and that both Zimbabweans and foreigners would be allowed to run the stores.

Despite the move, he stressed the Zimbabwe dollar remained the official currency.

"Some of you may ask, 'are we now trying to dollarise the economy?' No, the Zimbabwe dollar remains the legal tender," Gono said.

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