Saturday, July 29, 2006

Zim mulls devaluation of dollar

ZIMBABWE's central bank is expected to make a massive devaluation of the battered local currency when the governor announces his monetary policy statement on Monday.

The devaluation is aimed at closing the widening gap between the fixed official and parallel market rates.

The adjustment of the crashing Zimbabwean dollar could boost export earnings and ease foreign currency shortages.

It would, however, unleash a new wave of price increases across the crumbling economy.

The local unit, now the weakest currency in the world, is currently fixed at Z$101195,54 to the US dollar, while the parallel market rate has continued to fall away to Z$500000, making the official rate irrelevant.

The fixed rate has remained unchanged since the last monetary policy statement in January.

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