(Reuters) - Zimbabwe's currency plunged to a new record low on Thursday, trading at an average 1 billion to the U.S. dollar on a recently introduced interbank market and triggering massive price increases.
Traders were quoting the Zimbabwean dollar
at between 995 million and 1.45 billion against the greenback in Thursday morning trade, up from an average 700 million at the beginning of the week. The currency has depreciated by about 84 percent since the central bank effectively floated it in early May after years of an official peg.Analysts said the rapid weakening of the currency was being driven by inflation expectations as well as huge demand for hard currencies."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.
For instance, a loaf of bread, which cost about Z$15 million before the polls, now costs about Z$600 million.A two-litre bottle of cooking oil costs about Z$5 billion, almost equal to an average low-income worker's monthly wage, piling the misery on a country also grappling with food, fuel, water and electricity shortages, 80 percent unemployment and hyperinflation.
Official figures put Zimbabwe's annual inflation -- the highest in the world -- at 165,000 percent in February, but analysts say the figure vaulted as high as 1.8 million percent in May.