Zimbabwe currency crashes!

Inflation could reach 1,500,000% by year-end, say economists
Zimbabwe currency crashes!

Zimbabweans are switching to barter, payment in kind and the use of foreign currencies such as neighbouring South Africa's rand, instead of the local dollar, to survive hyperinflation and the accelerating economic meltdown, reports IRIN, the humanitarian news and analysis service of the UN Office for the Coordination of Humanitarian Affairs.

Zimbabwe's currency is still officially pegged at Z$250 to one US dollar; early last week the informal market price was about Z$100,000 to US$1, but by Monday June 25 it had crashed to Z$400,000 against the US dollar. In January this year US$1 was being traded for Z$3,000.

The country's inflation rate - the highest in the world - is officially at more than 3,700 per cent, although independent economists believe the real rate of inflation is around 20,000 per cent and could reach 1.5 million per cent by the end of 2007.

The IRIN report notes that Zimbaweans are increasingly forced to resort to barter, payment in kind and using foreign currencies. “We pay for soya beans and can swap one tonne for a drum of fuel,” said a recent advertisement in the state-sponsored daily newspaper, The Herald; bartering is becoming commonplace as individuals, traders and markets seek an alternative method of determining value.

Thomsen Siziba, a newly resettled farmer in the prime farming area of Chegutu, Mashonaland West Province, told IRIN that farm workers no longer wanted to be paid in cash, but rather in kind. More than a third of the population will require food assistance by early next year, according to a recent joint report by the UN Food and Agriculture Organisation and the UN World Food Programme.

Since 2000, more than a quarter of the population - over three million people - are believed to have migrated to neighbouring countries in search of work, or further afield to England and the United States. Only one in five people in Zimbabwe is employed.

(The opinions expressed in this report do not necessarily reflect those of the United Nations or its member states.)

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