updated 7/1/2008 7:12:48 PM ET 2008-07-01T23:12:48

A German company that has been supplying paper used by Zimbabwe's central bank to print bank notes said Tuesday it is stopping shipments immediately at the request of Germany's government.

The move could be a new problem for the regime of President Robert Mugabe, which has been churning out currency amid skyrocketing inflation that forces Zimbabweans to shop with bundles of cash. A pint of milk can cost 3 billion Zimbabwe dollars, or about 30 U.S. cents.

Giesecke & Devrient GmbH of Munich said it would stop delivering bank note paper to the Reserve Bank of Zimbabwe "with immediate effect." It said the decision came 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," chief executive Karsten Ottenberg said in a statement.

Zimbabwe's currency needs have spiraled upward as a shattered economy spurs overheated inflation.

Prices rose 165,000 percent in February, according to government figures, but independent experts say the real inflation rate is closer to 4 million percent.

Mugabe, who was sworn in as president for a sixth term Sunday after a widely discredited runoff election, was once hailed for leading Zimbabwe's independence fight. But he has grown increasingly unpopular for land seizures and other economic policies that wrecked the country's once-vibrant agriculture sector.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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