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Sunrise of currency reform - Index of articles and reports on Zimbabwe's new currency reforms
ZIMBABWE:
Post-devaluation price freeze order ignored
IRIN
News
August 09, 2006
http://www.irinnews.org/report.asp?ReportID=55052
HARARE - Zimbabwe
business has shrugged off a directive by the government to freeze
prices and has done the reverse, increasing commodity prices after
the Zimbabwean dollar was devalued by 1,000 percent.
The price freeze ordered by industry and international trade minister
Obert Mpofu coincided with a reserve bank initiative to rein in
the country's hyperinflation, which has been officially pegged at
1,183 percent.
Reserve Bank Governor Gideon Gono knocked three zeroes off the currency
to implement a new exchange rate regime of Z$250 to US$1, from the
previous official rate of Z$250,000 to the US dollar.
Gono has given Zimbabweans three weeks to exchange old denominations
for the new currency, but individuals were only permitted to exchange
a maximum of Z$100 million (US$1,000 at the official rate) at the
bank each day.
The monetary reform
has caused a run on the banks, as many people kept huge sums of
money outside of the banking system.
Mpofu said at the weekend that the price freeze was temporary, but
businesses have ignored the directive. Supermarkets, small traders
and petrol stations, citing the devaluation of the Zimbabwe dollar
against the US dollar, have hiked their prices.
Supermarket owner Wilbert Shoko, whose business is situated in the
upmarket residential area of Harare's Mabelreign, said the devaluation,
coupled with a spending spree by people desperate to offload the
old currency, had resulted in a natural increase in prices.
"The manufacturing sector in this country has virtually collapsed,
and that means we have to import basics like cooking oil, soap,
toothpaste and many other toiletries, especially women's sanitary-wear.
It does not make business sense to continue trading at old prices
when the local currency has been devalued," Shoko commented.
Petrol and diesel prices spiked from Z$500,000 per litre to Z$650,000.
On the parallel market the price for a litre of fuel has reached
Z$800,000. The fuel increase pushed taxi fares from Z$150,000 to
Z$200,000 and in some cases to Z$300,000.
By Monday, however, the country had "gone dry", after the fuel industry
announced they would stop selling petrol and diesel until the price-freeze
deadline had passed.
According to Mpofu's price-freeze statement, "no trader, manufacturer,
wholesaler, dealer, or retailer of any commodity shall, as a result
of the conversion of any price of that commodity, increase the price
of that commodity by any amount. This direction shall have effect
from August 1 to August 26, 2006."
Soldiers have been deployed on the streets of the capital, Harare,
and at Beitbridge, the main border crossing with South Africa.
As a reaction to the beating of taxi-drivers in the past week by
soldiers who accused the transport operators of sabotaging the economy,
residents attacked a uniformed soldier. In response, more than 100
soldiers attacked commuters during rush hour. Army spokesperson
Lt-Col Simon said the army command had not ordered the attacks on
the civilians.
In an apparent public relations drive to mend fences, Simon announced
that 66 soldiers had been deployed around the capital to offer health
services, counselling, electric repairs and general cleaning.
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