Inflation-hit Zimbabwe switches to petrol currency 06/08/2008 - 18:07:52
Desperate Zimbabweans are switching to petrol coupons as a currency after hyper-inflation made a mockery of their currency.
The move reflected the complete chaos of Zimbabwe’s financial system, where prices are quoted in US dollars, in Zimbabwe’s own new currency that came out last Friday, and in its old denominations, which have 10 more zeros than the new bills.
Even coins have returned to circulation after being abandoned in 2002.
Auctioneers Hammer and Tongues announced the first “auction by barter” to be held this Friday. Dozens of cars and other goods will be up for bids payable in petrol coupons instead of hard currency.
“Homegrown solutions for Zimbabweans. Now we are selling in litres not in dollars,” the firm said.
Bidders must put down a deposit of 1,000 litres of petrol coupons, worth about £750 at the current price, and pay the rest in coupons when they pick up their purchases.
Zimbabweans face acute shortages of local currency. Already coupons can be used to pay some household accounts. Many businesses also pay workers part of their earnings in scarce foodstuffs, or demand dollars for purchases, which is illegal.
“Where coupons become a currency it reflects the rapidly falling value of the Zimbabwe dollar. Barter selling provides something that holds its value,” said independent Harare economist John Robertson.
Private financial institutions say Zimbabwe’s inflation rate was about 12.5 million percent in May and estimate that it has probably climbed to 50 million percent this month.
Last week the central bank slashed 10 zeros from the plummeting local currency and Reserve Bank Governor Gideon Gono warned companies doing business in US dollars was illegal.
Obsolete coins have also been revalued, sending Zimbabweans hunting for ones they squirreled away in recent years.
Shops battled to count heaps of coins, causing long lines at checkout counters. One enterprising Harare business advertised coin weighing machines that even banks had discarded after coins went out of circulation in 2002.
Banks today quoted the official exchange rate at about 10 new Zimbabwe dollars (one billion old Zimbabwe dollars) to a single US dollar. Businesses quoted an exchange rate in new dollars of between 25-1 and 100-1.
Restaurants were offering discounts of up to 80 percent for either US dollars or local cash because of shortages of both. They also added a penalty fee of up to 80 percent on top of bill for those who paid by cheque, to cover price rises in the five days it takes one to clear.
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