The German banknote producer Giesecke & Devrient GmbH on Tuesday announced that it will stop delivering banknote paper to the Reserve Bank of Zimbabwe with immediate effect.

The company has taken this step in response to an official request from the German government and calls for international sanctions by the European Union and United Nations.

"Our decision is a reaction to the political tension in Zimbabwe, which is mounting significantly rather than easing as expected, and takes account of the critical evaluation by the international community, German government and general public," said Karsten Ottenberg, chairperson of Giesecke & Devrient.

Earlier on Monday, the Danish pension fund ATO announced that it might sell its shares in Anglo American because of the mining group's continuing activity in Zimbabwe. Last week Anglo said it was pressing ahead with a $400m investment in the Unki platinum mine in Zimbabwe.

A shortage of banknote paper could put immense pressure on the Zimbabwean central bank, which has been printing money to keep up with spiralling inflation, currently estimated to be close to 4 million percent.

The Zimbabwe dollar is currently trading at 10 billion to a single US dollar in direct bank buying. The largest Zimbabwean bill in circulation is a 50 billion note (R40).

- Fin24.com