HARARE, Jan 1: Zimbabwe’s economy is now virtually based on foreign exchange, a state daily said on Thursday, with fewer goods and services available in the local dollar which is rapidly losing its worth because of galloping inflation,

“A survey this week revealed a significant drop in demand for the local unit as very few shops and traders were still selling products in Zim dollars,” the newspaper reported.

The Zimbabwe dollar continues to lose its worth as the country’s chronic economic woes show no signs of abating. One US dollar is worth four million Zim dollars at the official exchange rate and three billion Zim dollars on the black market.

Most traders and service providers from streetside vegetable vendors to mobile phone service providers are pegging their prices in foreign currency to hedge against losses.

Since September last year, Zimbabwe’s central bank has licenced at least 1,000 shops to sell goods in foreign currency in a move aimed at helping businesses suffering from a chronic shortage of foreign currency to import spare parts and foreign goods.

Others shops and service providers have followed suit although they have not been authorised by the government and despite warnings that those arrested for flouting foreign exchange regulations would be prosecuted.

A single journey by minibus within Harare costs one US dollar while hired taxis charge at the rate of one dollar per kilometre (about half a mile).—AFP

In the latest move, the authorities licenced mobile phone service providers to charge for airtime and other services in foreign currency.

Once a regional economic model, Zimbabwe is in the throes of economic crisis with inflation officially at 231 million per cent and most families unable to afford a square meal.—AFP