Dear AR guests

I hope you are having a wonderful Christmas with your families or whomever and that you are looking forward to 2006 and the future ..

JUST FYI it is worth keeping an eye on the Zimbabwe dollar as it slips into oblivion

Cheers and good health .... Thurs, Dec 29, 2005 - 1 US Dollar = 1.48232 New Zealand Dollar

Peter ( languishing downunder in NZ ) the land of the long white cloud and sheep
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'Fall of Zimdollar Signals Beginning of Race'

The Herald (Harare) December 29, 2005

ECONOMISTS believe the sustained fall of the Zimbabwe dollar against other key currencies in recent weeks signals the beginning of a race to catch up with the parallel rate.

For others it was likely that a modest gap will remain between the interbank rate and what holders of free funds are asking from those buying free funds.

The two rates would only come into line once capital inflows are equal to capital outflows. But as rates converge, the possibility of a single exchange rate, regardless of the source of funds or desires of users, comes tantilisingly close.

"It is our view that the interbank rate will stabilise at levels between the parallel market rate and the fair value rate, before they unify in the longer term," according to a recent economic report by Interfin Securities.

"It can be clearly seen that the interbank rate is well above the fair value rate, thus providing an attractive environment for exporters."

By January, the report predicts the interbank rate would be $83 000 against US$ while the fair value rate would be around $56 700 to the greenback. The parallel rate is currently fluctuating between $85 000 and $95 000.

The Reserve Bank plans to have a unified exchange rate next year. Currently, the official exchange rate, also known as the auction rate and the interbank rate, are in existence. The auction rate trades at $26 000 versus the US$.

Insufficient supply vis-a-vis high demand has exerted a lot of pressure on the local unit, which has been on a free-fall since the start of the year, and worsened since October.

Since the introduction of the Tradable Foreign Currency Balance System two months ago the Zimbabwe dollar has lost over 35 percent of its value to the US$, as market forces moved in to determine the rate of exchange.

The Z$ has fallen to $81 000 from around $61 000 against the United States dollar.

Against the British pound it has dropped to $143 100 from nearly $75 000 while versus the South African rand the dollar has dropped to $13 000.

The report said: "We believe that the market-based system, provided it is allowed to reflect the forces of supply and demand, will likely attract inflows of foreign currency from the parallel market to the formal market."

However, inflows at the interbank system are still depressed as most exporters would prefer to hold on to their funds up to the mandatory liquidation period in anticipation of a further depreciation in the local currency.

Black market rate has remained constant for 3 months at 90,000 to 94,000 to the US$

Zim govt extends life of temporary currency

Harare, Zimbabwe - 31 December 2005 03:37

The Zimbabwe government has decided to extend the life of its temporary bank notes by another six months as the government works on introducing a new currency, state radio reported on Saturday.

Two years ago Zimbabwe introduced a temporary form of currency called "bearer cheques" to ease chronic cash shortages that hit the country as a result of spiralling inflation.

"The Ministry of Finance has announced that the expiry date of Reserve Bank of Zimbabwe bearers' cheques, which was postponed to 31 December 2005 by the Finance Act has once again been postponed to June 30 next year," the radio report said.

Initially designed as a stop gap measure, Zimbabweans have grown used to the bank bills that come in denominations of Z$20 000, Z$10 000 and Z$5 000 (25, 12 and six US cents). But their value has been severely eroded by inflation, now at 502%.

Those wanting to make big purchases frequently have to hand over bags of money while customers are seen wheeling out suitcases full of money from their banks.

Reserve Bank Governor Gideon Gono has promised to introduce a new permanent currency this year. But economists have warned it is futile to introduce a new currency until inflation is brought down.

Gono says aims to reduce inflation to around 80% by the end of 2006. - Sapa-DPA

We grow world class baboon cabbage up in the binga area. Gono obviously smokes alot of it. Inflation by real economists is expected to stay at arround 500%