Zimbabwe dollar in freefall

Mar 12, 2008, 16:10 GMT

Harare/Johannesburg - Zimbabwe's battered dollar has sunk to staggering new lows on the parallel market on the back of growing election jitters.

The currency traded Wednesday at nearly 41 million to the US dollar and more than 81 million to the British pound on the parallel market for foreign currency, dealers said.

Just two days ago, the black market rate for the US dollar stood at just over 31 million Zimbabwe dollars. Last Wednesday the rate was 29 million to the greenback.

President Robert Mugabe's government artificially pegs the value at 1 US dollar to 30,000 Zimbabwe dollars. At independence in 1980, the local unit was roughly at parity with the pound.

With the currency in free-fall, supermarket prices are rising like never before. Bread in one bakery was selling at 9.5 million a loaf by Wednesday lunchtime, up from 7.5 million Tuesday afternoon.

A box of locally-produced corn flakes was selling for 75 million Zimbabwe dollars and an egg for 4 million. Many workers on farms seized by the government under its controversial land reform programme only earn 30 million Zimbabwe dollars a month, reports say.

Mugabe has called on the state-appointed National Incomes and Pricing Commission (NIPC) to enforce price controls, state radio reported Wednesday. With inflation running at more than 100,580 per cent at the last count in January, analysts have warned the economic crisis could prove the president's nemesis.