Now petrol coupons are the new currency in Zimbabwe

Dictator Robert Mugabe has banned his people from using U.S. dollars.

The country's own currency is so devalued that new notes were issued on Friday with ten less zeros on them than the ones they replaced. 

Coins have been brought back into circulation as inflation continues to shoot up

Zimbabwean auctioneers Hammer and Tongues plan to hold the first auction by barter this Friday.

Dozens of cars and other goods will be up for sale and bidders will have to pay with petrol coupons instead of currency.

Despite a ban on using other currencies, including U.S. dollars, the auction is legal.

In a statement the auction house said: 'Homegrown solutions for Zimbabweans. Now we are selling in litres not in dollars.'

Bidders must put down a deposit of 1,000 litres of petrol coupons, currently worth about US$1,500 in Zimbabwe, and pay the rest in coupons when they pick up their purchases.

Zimbabweans face acute shortages of local currency and petrol coupons can already be used to pay some household accounts. Many businesses also pay workers part of their earnings in scarce foodstuffs, or illegally demand U.S. dollars for purchases.

'Where coupons become a currency it reflects the rapidly falling value of the Zimbabwe dollar. Barter selling provides something that holds its value,' said independent Harare economist John Robertson.

Private financial institutions say Zimbabwe's inflation rate was about 12.5 million percent in May and estimate that it has probably climbed to 50 million percent this month.

Obsolete coins have also been revalued, sending Zimbabweans hunting for coins they squirreled away in recent years.

Shops battled to count heaps of coins, causing long lines at checkout counters. One enterprising Harare business on Tuesday advertised coin weighing machines that were discarded after coins went out of circulation in 2002.

Shopping and visits to cafes and restaurants became further confused this week by a range of different exchange rates used against the U.S. dollar.

Banks on Wednesday quoted the official exchange rate at about 10 new Zimbabwe dollars (one billion old Zimbabwe dollars) to a single U.S. dollar but businesses quoted an exchange rate in new dollars of between 25-1 and 100-1.

Embattled restaurants were offering discounts of up to 80 percent for either U.S. dollars or local cash because of shortages of both. They also added a penalty fee of up to 80 percent on top of the bill for those who paid by cheque, to cover the estimated price rises during the five days it takes a cheque to clear.

Businesses have reported a slight upturn in transactions since Friday, despite the money crisis.

'I think people are more sanguine about spending 100 new dollars instead of a trillion old dollars. It doesn't feel so bad,' said Robertson, the economist. But that would not last long, he added.

Since the new money came out on Friday, it has fallen in value by about 20 percent.

'The petrol coupon has a more stable value and barter works,' Robertson said.