HARARE, Zimbabwe: The black market exchange rate for the U.S. dollar broke the 1 million Zimbabwe dollar mark Thursday and the government announced another sharp jump in inflation.
Worsening hard currency shortages more than doubled the price of the U.S. currency in the past 10 days, pushed up by central bank buying on the unofficial market, dealers said.
"People are asking for a million and getting it in big bank to bank transfers. Cash for cash is anything above 750,000-1," as the country faces shortages of local bills, said one dealer. "Technically, it's still illegal."
The official exchange rate is 30,000-1. In the first week of October, the black market rate surged to about 520,000-1, up from 400,000-1 in mid September.
"There's too little foreign exchange out there and too many chasing it," including the central bank, said the dealer, who spoke on condition of anonymity for fear of being punished by the government.
Those with foreign exchange "don't want to part with it as a hedge against inflation," the dealer said.
Lengthy power and water outages linked to shortages of hard currency, spare parts and gasoline occur daily.
Travelers returning home to Harare from shopping trips for soap, cooking and other basics across the country's borders have reported central bank buyers at the downtown bus terminal offering top black market rates for leftover U.S., Botswana and South African currencies needed to pay for food, power and gasoline imports.
Police raids on currency dealers at the terminal have stopped.
Central bank governor Gideon Gono said in a policy speech this month that his bank saw the terminal as a source of hard currency and that the official exchange rate was all but obsolete.
The state central statistical office announced official annual inflation rose to 7,982 percent in September, up from 6,592 in August, already the highest in the world. Independent estimates put real inflation closer to 25,000 percent and the International Monetary Fund has forecast it reaching 100,000 percent by the end of the year.
According to the monthly statistical review Thursday, the poverty line for a family of five nearly doubled to 22.6 million Zimbabwe dollars (US$22.60, €16.25 at the dominant black market exchange rate) in September, amid rising prices and rampant black marketeering in scarce staples. Most essential goods that have disappeared from store shelves.
A senior school teacher earns three-fourths of the benchmark for poverty — about US$17 (€12), having received a 200 percent pay increase awarded after a crippling strike closed down schools across the country earlier this month.
A regular police patrolman takes homes less that US$5 (€3.50) a month.
When available, a can of beans costs about 60 U.S. cents (about 40 euro cents) at the black market exchange or US$15 (€10) at the official rate.
In a bid to tame inflation the government in June ordered prices on most goods and services to be slashed but relaxed this as it merely worsened already chronic shortages. On Friday, the government allowed a 300 percent increase in the price of a loaf of bread.
An estimated 4 million Zimbabweans — one-third of the population — live and work abroad and their remittances are the largest single source of hard currency. Zimbabwe was once the region's breadbasket and Africa's second largest exporter after South Africa.
