The biggest single slump of the Zimbabwean dollar took place in the last six days, as people scrambled to acquire foreign currency to pay for scarce fuel. The dollar sell-off follows a government decision to allow people to pay for fuel in foreign currency.
By Thursday, the value of the Zimbabwe dollar had plummeted by nearly half, trading on the black market, where much of the trading takes place, at 45,000 to one U.S. dollar, down from 25,000 to a U.S. dollar a week ago.
The black market rate has sunk well below the Reserve Bank rate of about 17,000 to the U.S. dollar that was announced last week, marking about a 40 percent devaluation.
The Reserve Bank holds foreign currency auctions, which currently provide an average of only about 15 percent of the foreign currency needs of commerce and industry. Without the parallel or black market, most manufacturers say, they would be forced to close down.
Zimbabwe has been plagued by acute food and fuel shortages and needs foreign currency to pay for imports. Last week, the government announced that anyone with foreign currency could buy fuel, no questions asked. That apparently sparked the rush on foreign currency and the subsequent decline of the Zimbabwe dollar on the black market.
Economist John Robertson says inflation could reach 1,000 percent by year's end. Earlier this month, government statistics put inflation at 167 percent.
Businessmen who have been arranging private imports of fuel say it has been a difficult operation, as most people could only scrape together small amounts of foreign currency. Zimbabwe needs a minimum of about 30 million liters of fuel a month to fulfill basic needs.
The manager at an upmarket tourist outlet in Harare this week said the decline of the currency's value has been so rapid over the past week, she did not know how to price her goods.