ZIMBABWE: Zimbabwe's Central Bank devalued the nation's currency by nearly a third this week in an attempt to contain its currency black market and raise much needed foreign currency for vital food and fuel imports.
In a move that left the currency as one of the least competitive in the world, Reserve Bank of Zimbabwe governor Gideon Gono devalued the Zimbabwean dollar on Thursday to Z$9,000 to the US dollar, from the previous rate of Z$6,200, a devaluation of 31 per cent.
The country has been suffering its worst economic crisis since it gained independence from Britain in 1980. And, since the highly criticised government-backed land seizures began in 1999 the currency has been steadily losing its value, with exports also declining by a third.
The current economic crisis has been widely blamed on the mismanagement of President Robert Mugabe's ruling Zanu-PF party, which was recently returned to power despite widespread allegations that electoral rigging had taken place during the March 31st general election.
As a result of the country's political and economic instability, the black market has flourished, as people appear willing to pay way above the official exchange rate in order to get their hands on the more stable foreign currencies.
Black market rates of up to Z$18,000 to the US dollar are not uncommon and such rates have been hampering government efforts to import much needed essentials such as fuel, electricity and food as most people exchange on the black market rather than through official channels.
A severe drought has left Zimbabwe in need of 1.2 million tonnes of food imports at an estimated cost of $250 million over the next 12 months.
Harare was virtually dry of fuel this week because importers refused to buy in fuel until Mr Gono had announced his monetary policy.
"It is difficult for private players to bring in fuel at the moment. We will be forced to sell at a loss because of the exchange rates," a senior executive with one Harare-based fuel firm, who did not want to be named, told South Africa's Business Day newspaper.