afrol News, 6 June - Political uncertainty en-route to Zimbabwe's presidential run-offs has plummeted the country's international trading muscle to a record low. Zimbabwean dollar is trading at 1 billion to one U.S dollar. Zimbabwe's annual inflation is recorded as the highest in the world at 165,000 percent.

On top of the soaring food prizes, huge demand for hard currency and high inflation expectations are also cited by analysts as strong catalysts in the alarming rates at which Z$ depreciates.

"The exchange rate is being driven by massive demand for forex, as well as the desire to hedge against inflation," said Mudzingwa Nhiwatiwa, a research analyst at ZABG banking group.

"It shows our forex generating capacity is perilously low. Until we restore production and exports, the Zimbabwean dollar will continue to depreciate sharply," Mr. Nhiwatiwa noted.

In the country with 80 percent unemployment rate, a two-litre bottle of cooking oil cost about Z$5 billion while a loaf of bread cost about Z$ 600 million from Z$ 15 million before 29 March elections.

Elections that resulted in opposition Movement for Democratic Change (MDC) claiming victory in parliamentary seats forced President Robert Mugabe's ZANU-PF demanding a run-off for presidential elections, meaning anticipated reforms may have to wait for a clear political change.

The country's commission for elections had revealed that there was no outright winner between the two rival parties to claim presidential results. Run-off elections have since been scheduled for 27 June.

Zimbabwe's once rich agriculture sector has nose-dived since 2000 after Mr. Mugabe's land reclamation policy whereby farms owned by whites were forcefully and violently seized and given to blacks, majority of whom supported his ZANU-PF's grip on power for almost 29 years.

Zimbabwe is now in dire need for basic foodstuffs such as meat, milk, bread and depends mainly on humanitarian aid to feed its people.

Meanwhile, the government has accused humanitarian aid groups of supporting MDC and were as a result instructed to stop giving food to the people.

"If they want to continue with their programs, they know what to do. They must choose between politics and genuine humanitarian work," Deputy Information Minister Bright Matonga had said yesterday.

Zimbabwe's Central Bank introduced 500 million Zimbabwe dollar notes worth just US$2 in May, only a week after issuing the 250 million bill in one of its continuous efforts to deal with escalating inflation.

By staff writer

© afrol News

Related pages and feature

Current afrol News Top Stories