10bn to one: how Zimbabwe is tackling inflation

Zimbabwe is knocking 10 zeros off its hyper-inflated currency to make 10 billion dollars become one dollar.

The country is suffering the world's highest inflation of over two million per cent

Central bank governor Gideon Gono said the high rate is preventing computers, electronic calculators and bank machines handling basic transactions which come to billions and trillions of dollars.

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Just last week Mr Gono introduced a new 100 billion-dollar note that was not enough to buy a loaf of bread.

Mr Gono says the new rate will start on Friday with the issue of a 500-dollar bill equivalent to 5 trillion dollars at the current rate.

President Robert Mugabe warned businesses he will impose a state of emergency if they use the economic crisis to profiteer.

In a televised address he told them not to "drive us further" but said if they did the government would impose emergency measures.

Meanwhile South African President Thabo Mbeki was heading for Zimbabwe as talks he is mediating to end the country's crisis faltered.

His spokesman said Mr Mbeki will meet Mugabe, having already talked to main opposition leader Morgan Tsvangirai in South Africa yesterday.

Mugabe and Mr Tsvangirai agreed last week to power-sharing talks to end months of state-sponsored electoral violence that has killed more than 150 opposition activists.

Talks began six days ago in South Africa. Both men say they won elections and should lead Zimbabwe.

Several officials have said the talks are deadlocked over who would lead a new government.