3 Feb 2009

Zimbabwe knocks 12 zeros off inflation-hit dollar

8:17 am on 3 February 2009

Zimbabwe's central bank has revalued its dollar again, lopping another 12 zeros off its battered currency to try to tame hyperinflation and avert total economic collapse.

The southern African country is battling the world's highest inflation rate, officially put at 231 million percent, and acute shortages of food and foreign exchange.

Reserve Bank of Zimbabwe Governor Gideon Gono announced the new currency moves on Monday, adding that some foreign exchange controls will be relaxed and gold producers now can sell bullion directly and not to the central bank as in the past.

Late last month the country allowed businesses to charge in foreign currencies in a bid to tackle inflation and Mr Gono said those businesses could pay their workers in foreign currency.

The country's stock exchange, which has not traded for two months, would also be licensed to trade in foreign currency once listed firms and the exchange provide evaluation criteria.

The financial crisis has been worsened by political stalemate between President Robert Mugabe and his rival Morgan Tsvangirai, but the opposition last week agreed to join a coalition government, raising prospects the economy could be saved from further ruin.