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Cash
shortage resurfaces as Zimbabwe currency plunges further
Brian Latham, Bloomberg
March 11, 2008
http://www.bloomberg.com/apps/news?pid=20601116&sid=aO3baMKkEuPo&refer=africa
Zimbabwean lenders
face a shortage of bank notes because the central bank can't keep
pace with demand after the local currency lost more than a quarter
of its value this month.
The Zimbabwe dollar changed
hands at 35 million to the U.S. currency on the black market today,
compared with 25 million on March 1, traders including John Tonganyika
said in interviews today from the capital, Harare. Banks began running
short of notes on March 7, said Yvette Chakaipa, a teller in a city
center branch of Kingdom Financial Holdings Ltd.
``The central bank has
been delivering new notes, but they can't deliver fast enough to
keep up with demand,'' she said in an interview from Harare yesterday.
Zimbabwe has the world's
highest inflation rate and the fastest-shrinking peace-time economy,
following a failed land redistribution program implemented by President
Robert Mugabe in 2000. The currency has plunged as the government
boosts spending ahead of a March 29 election, in which Mugabe, 84,
is seeking to extend his 28-year rule of the southern African nation.
Giesecke & Devrient
Gmbh, the world's second-largest printer of money, delivers 170
trillion Zimbabwe dollars weekly to the country, Britain's Sunday
Times reported on March 3. That equates to about $4.86 million on
the black market, where most Zimbabweans buy their foreign exchange.
The Munich-based company is paid 500,000 euros ($774,750) a week
for the service, the newspaper said.
A man who answered the
phone at Giesecke's office in Dubai wouldn't comment when called
today, citing confidentiality agreements. He declined to identify
himself.
`Product
of Hyperinflation'
Inflation
in Zimbabwe accelerated to 100,580 percent in January amid shortages
of basic commodities after the government imposed controls on industries
including retailers and wholesalers in June. Prices of all goods
and services from food to school fees are controlled by the government
and businesses aren't allowed to make a profit of more than 20 percent.
Cash shortages are an
``inevitable product of hyperinflation,'' John Robertson, an independent
economist, said from Harare today.
``Even at the official
rate of inflation, it is stretching the central bank's ability to
print new money to keep up with inflation and the subsequent rise
in the cost of goods.''
Deliveries of bank notes
need to be stepped up ``considerably'' this week to avoid customers
being deprived of cash, said Simon Kaseke, a manager at a branch
of ZB Bank Ltd. in Harare. In January, the central bank issued 13
trillion Zimbabwe dollars for circulation to ease a shortage.
No one at the central
bank was available to comment when their main office was contacted
today, said a man who answered the phone without identifying himself.
Contact the
reporter on this story: Brian Latham via the Johannesburg bureau
on pmrichardson@bloomberg.net
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