Currency free fall forces Zimbabwe into black market

The Zimbabwe currency went into free fall today when a shortage of hard currency forced the desperate state-owned power and oil companies to buy US dollars on the black market.

Desperate for hard currency to buy power and gas abroad, the state companies were paying up to 2.000 Zimbabwe dollars for one US dollar.

In February, the official rate was 555 Z dollars to one US. Just five years ago, Z8 bought US1.

“It’s going crazy. The demand for hard currency is driving massive falls in the value of our money,” said one trader.

The currency crisis is just the latest in a long list of Zimbabwe’s economic woes.

Industrial production is estimated to be 60% below capacity. Inflation has soared to a record 228% this year, and unemployment is nearly 70%.

Despite the official currency devaluation, Zimbabwe still suffered a massive shortage of hard currency, making it difficult to get money to buy imports.

The National Oil Company of Zimbabwe, the state oil monopoly, announced last week it had run out of hard currency to import fuel and was preparing to buy US dollars “at any rate.”

Many foreign suppliers, angry at not getting paid, have reduced the flow of electricity, leading to power failures across Zimbabwe.

Queues of vehicles coiled around empty petrol stations today. With no fuel available, traffic in Harare was light, almost resembling weekend traffic flow.

Many commuters have resorted to walking several miles to work. Those who live too far away, simply don’t go at all.