Zimbabwe has decided to float its local currency on foreign exchange markets in an attempt to eliminate speculation on the black market, the governor of the Central Bank said on Wednesday.

"The Reserve Bank has with immediate effect introduced a willing buyer-willing seller priority-focussed twinning arrangement in the foreign exchange market," Governor Gideon Gono said at a press briefing.

The official exchange rate in Zimbabwe has been kept at Zim$30 000 for one US dollar since September 2007 - but on the thriving black market, one US dollar can be exchanged for around Zim$100-million.

Gono said that with the new reforms, "the availability of foreign exchange will gradually improve to a point not experienced over the last few years".

This is the second time in four years the beleaguered southern African country has opted to liberalise its foreign exchange trading system.

In January 2004 it introduced a foreign exchange auction system in which the central bank determined the rate in a bid to narrow extreme differences between the official and parallel rates.

AFP