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Redenominated One Month Ago, Zimbabwe Dollar Back In Freefall

A leading Zimbabwean economist said Wednesday that the 10 zeroes lopped off the national currency early last month could be back by mid-November and joined by more by end-2008 if Harare does not reform economic policy.

Independent economist John Robertson said continued money-printing by the Reserve Bank of Zimbabwe to fund government operations is driving the currency's dramatic decline which has been paralleled by a new surge in prices for basic goods in recent days.

For example, transport from the Harare suburb of Kuwadzana to the city center cost Z$100 on Monday, but by Wednesday had doubled to Z$200.

Sellers of essentials such as bread and maize meal are demanding payment in hard currency. A loaf of bread fetched 20 rand and a bucket of maize meal was going for 100 rand.

Robertson has circulated a report concluding that "nothing of importance" was achieved in the central bank's recent redenomination of the currency and issuance of new notes. He said that based on parallel market exchange rates, "prices doubled more than five times" last month, outpacing the government's ability to keep enough cash in circulation.

"To make matters worse, the pace appears to be accelerating," he wrote. "In the second half of August, prices were approaching a doubling rate of twice a week, and the first movements in September suggest that the pace is gathering momentum...Perhaps we should brace ourselves for the return of the $50 billion and $100 billion bearer-cheque notes."

Robertson told reporter Patience Rusere of VOA's Studio 7 for Zimbabwe that the Zimbabwe dollar is depreciating at a rate of about 3,000 percent a month, warning that if the trend is not checked it could lead to social unrest.

More reports from VOA's Studio 7 for Zimbabwe...