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Tuesday, 1 July 2008

Zimbabwe economic collapse very near

The new week dawned with even more dramatic news. The USD, trading at over 30 billion to 1 on Friday opened the day at over 60 billion.

As the cash crisis grows, the disparity between the street and the business rates widened as the former relies on the availability of hard cash. When it is in short supply, desperate relatives of economic exiles compete for the ever diminishing ZWD by reducing the price.

As it stands now, no matter the size of the corporation or business, the limit on daily cash withdrawals still remains at ZW $25 Billion, enough to buy 6 fresh eggs!

Likewise, employees do not have enough days in the month to withdraw sufficient cash to pay for their groceries as the financial sector nears collapse.

The OMIR sits at 66 Billion to USD1 and the Hard Boiled Egg Index Fair Value Rate has risen to 28 Billion which is just above the street rate.
Mugabe may literally run out of money - protests have started at the Munich based printers, Giesecke & Devrient, who produce Zimbabwe's money, including, finally, by the German state. Because the trade is a tiny fraction of the company's income, as with Tesco they may well decide to stop the bother and the supply.

UPDATE: Pressure pays, they've stopped supplying notes.

A visibly rattled Mugabe at Sharm el-Sheikh

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