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Zimbabwe introduces Z$100 000 note
Business in Africa (Online)
June 01, 2006

http://www.businessinafrica.net/news/southern_africa/759059.htm

Harare - Zimbabwe's central bank would issue a new Z$100 000 (about $1.00) banknote after inflation topped 1 000 percent last month, one of the world's highest rates, a state daily reported.

The new banknote would go into circulation on Thursday and would hold tender until December, The Herald newspaper said.

Zimbabwe started introducing bearer cheques with a temporary validity three years ago to ease critical cash shortages.

The latest note, with a picture of the world-famous Victoria Falls, comes four months after Zimbabwe's reserve bank unveiled a Z$50 000 bearer cheque.

"It is not the first and last time to see us introducing bearer cheques and we will not hesitate to introduce higher denominations," The Herald quoted Reserve Bank Governor Gideon Gono as saying.

"For the past few months, we have been assessing to see whether the current denominations were still serving the intended purpose."

Zimbabwe is in the throes of an economic crisis with galloping inflation which peaked to 1 042.9 percent last month, soaring poverty levels, a 70-percent-plus unemployment rate and acute shortages of fuel and basic goods.

Central bank governor Gono had forecast that annual inflation would peak at 800 percent in March and recede to below 500 percent in June before reaching double-digits in 2007.

But independent economists are warning that Zimbabwean inflation is fast approaching the 2 000-percent mark.

"In economic terms, the velocity of the circulation of money will be increasing rapidly," John Legat, of the Harare-based Imara Asset Management, said in an alert last week.

"Wages are likely to be rising as fast as inflation. Prices are being driven by ever higher input costs at point of manufacture. This suggests that current inflation is nearer 1 500 percent to 2 000 percent."

At the country's independence from British colonial rule in 1980, the Zimbabwean dollar was roughly on par with the pound sterling. Zimbabweans then used cents, one dollar coins and bank notes in four denominations.

But due to inflation, the Zimbabwe government introduced five new denominations from 2001 while coins were phased out as the value of the Zimdollar continued to depreciate against most currencies. Sapa-AFP

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