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The policy change was the first act of Zimbabwe's new coalition government, fulfilling a campaign promise made by long-time opposition leader Morgan Tsvangirari.

Huge handfuls of local currency are barely enough for a loaf

Finance minister Tendai Biti, one of Tsvangirai's party colleagues, said 130,000 soldiers, teachers, civil servants and other government workers will be paid in US dollars.

A monthly salary worth £70 will be a raise for most government employees, who had seen their buying power drop to the equivalent of £20 per month due to inflation.

Biti also scrapped licences required for shops doing business in foreign currency.

The change will allow more merchants to legally trade in American dollars and South African rand.

But even as the new coalition took its first steps, a judge ordered the opposition's nominee for deputy agriculture minister be jailed for at least two more weeks pending trial on terrorism charges.

Prime minister Tsvangirai, leader of the opposition Movement for Democratic Change, called Roy Bennett's arrest last week an attempt by factions in president Robert Mugabe's party to derail the power-sharing deal.

The agreement had forced several of Mugabe's top aides to hand Cabinet posts to MDC politicians.

The detention of Bennett and several other opposition figures and independent human rights activists in recent weeks raises the pressure on Tsvangirai to convince supporters that joining a government with Mugabe and his ZANU-PF party was not a mistake.

Bennett's wife Heather today attacked the MDC for "not doing enough at all" to help free him from jail.

"Roy has been there five or six days", she said.

"As far as I am concerned he is no better off in there under a coalition government than he was under a ZANU-PF government."

Critics blame Mugabe - in power since 1980 - for political repression and an economic collapse that has seen worsening hunger, a widening cholera epidemic and spiralling prices.

Ordinary Zimbabweans have long since stopped doing business in Zimbabwean dollars - with even trillion-dollar notes now useless.

Mugabe's party partially opened the economy to stable currencies like the US dollar, rand and British pound.

Schools and hospitals are allowed to charge in foreign currency, while drivers demand fares in foreign currency and even the Herald, the state-controlled daily newspaper, began printing its price as $1 above its masthead last month.

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The policy change was the first act of Zimbabwe's new coalition government, fulfilling a campaign promise made by long-time opposition leader Morgan Tsvangirari. Huge handfuls of local currency are barely enough for a loaf Finance minister Tendai Biti, one of Tsvangirai's party colleagues, said 130,000 soldiers, teachers, civil servants and other government workers will be [...]

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The prices of food increased due to the rapid increase of oil prices. Since oil is a fule supply the prices of everything will increase with it. This has caused the people to trade using gold and not the country's money

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The central bank of Zimbabwe printed off more banknotes with a higher face value (added more zeros to the papers)to help stabilize the country's "Debt". This has caused the value of Zimbabwe's currency to decrease tremendously. After the exchange rate to the dollar was 1 Zimbabwe dollar was worth $1.25.the inflation caused the currency's value to be savorily low. Just like what they did in Egypt during the new Suez canal building period. the printed off more pounds with the picture of the Suez canal which has resulted in decreasing the value of the Egyptian pound in exchange to the USD.

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In the period from1998 has resulted in a low farming rate and production. The country took big chunks of land from the white farmers and redistributed it to the black farmers, which has resulted in a low food production and that caused people to fight over the remaining food products. This disturbed the economy and the import and export value.

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In 1990, the inflation rate in Zimbabwe was 17 percent. The following year it jumped to 48 percent, and then continued to climb over the next 17 years. The government tried a number of different methods to control inflation, such as instituting price caps, outlawing the use of foreign currency, and printing new denominations. By the mid-2000s, inflation had increased to a rate so high that banknotes of Z$100,000,000 and higher were required for simple daily transactions. The government also attempted to print bills to pay off international debts, such as the $21 trillion bill they attempted to give the International Monetary Fund.

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.A few years ago, national debt in Zimbabwe increased to over 100% of GDP. To finance the National Debt, the Government started printing money; but, this only devalued the value of existing money and caused prices to rise.

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In 2001 and 2002, Zimbabwe experienced several droughts. These droughts resulted in low harvests and low supply of food. This caused people to compete for the available food. As the supply is low and the demand is high, this causes the prices of the food to increase

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After the war that Zimbabwe has been through, many war-veterans had to be payed. This cost the country a lot of many. Fore coming was the DCR war, which was one that Zimbabwe also joined. This war cost Zimbabwe billions of dollars just for the two year stay. To be precise, it cost over $30 million US dollar. A month after the war the country was in great debt.

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The rise of the oil prices of the international market is one of the causes of the inflation that happened in Zimbabwe since 1999. As Zimbabwe produces oil, it is one of its major fuel supplies. With the rise of the prices of oil, this also caused a rise on the prices of goods in the country.