Wednesday, March 5, 2008
Zimbabweans Labour Under Weight of Weak Dollar
March 5, 2008
Shoppers in Zimbabwe no longer need worry about carrying their purchases home: the chances are that their groceries weigh less than the banknotes needed to buy them.
The Zimbabwean dollar tumbled to a new low of 25 million to a single US dollar today, just four months after breaking through the one-million barrier. With Zimbabwe dollars mostly available in bundles of 100,000 and 200,000 notes, a US $100 note now buys nearly 20kg of local notes.
Under Robert Mugabe's economic meltdown, Zimbabwe has the world's highest inflation rate of 100,500 per cent. Currency dealers say that political uncertainty ahead of presidential and parliamentary elections on March 29 is also encouraging people to hang on to their hard currency.
At the same time, they added, the central bank is pumping out Zimbabwean dollars to pay for election costs and buying greenbacks on the black market to pay for power, petrol and vehicle imports ahead of the elections.
The value of the Zimbabwe dollar weakened steadily against hard currencies throughout last year but its fall quickened dramatically in recent weeks.
With industry and production collapsing, Zimbabweans have become heavily dependent on imports of the corn meal staple and basic goods.
Until last year, the former agricultural power was self sufficient in canned and processed foods, household goods, soap, toothpaste, toiletries and other items now imported from neighbours Malawi, South Africa and Zambia and from as far afield as Egypt, Germany, Iran and Malaysia.
According to latest official poverty line data, an average family of five needs a monthly income US$35 to survive, even in poverty. But most farmhands and other lower paid workers earn less than the equivalent of US$10 a month - and the formal unemployment rate is 80 per cent.