Thousands of people have violently protested skyrocketing food costs made worse by the devaluation of the local currency in Somalia's capital, Mogadishu. From our East Africa Bureau in Nairobi, Correspondent Alisha Ryu reports that many Somali traders are refusing to accept local currency because a large amount of the notes are counterfeits.

Somalis demonstrate against record-high inflation worsened by the devaluation of the local currency in the face of rising food prices, in the country's capital of Mogadishu, 05 May 2008

The violence forced hundreds of shopkeepers to close their shops. There are unconfirmed reports that several people were killed or injured in the melee.

Demonstrator Bilan Muse tells VOA that ordinary Somalis, already among the poorest people on earth, have been watching helplessly as food prices skyrocketed in recent months. But she says in recent days, many traders have been insisting on being paid in U.S. dollars instead of the Somali shilling.

Muse says few people have access to dollars, leaving most unable to buy anything.

She says it is an outrage that businesses are refusing to accept the country's currency and laments that there is no functioning government that can help the poor people of Mogadishu.

"We have been bombed, victimized, and now even our money is worthless," she said.

For the past year, a violent insurgency, a prolonged drought, and a sharp rise in global food and oil prices have helped push Somalia's inflation to its highest level in nearly two decades. Although there are no official figures, it is estimated that the monthly inflation rate may be as high as 150 percent or more.

But Somalis say the uncontrolled dumping of hundreds of millions of illegally-printed Somali shillings into the market in recent months has dealt the most crippling blow to the economy. The counterfeit notes have caused a massive devaluation of the Somali shilling.

Some residents in Mogadishu believe that the president of Somalia's interim government Abdullahi Yusuf and some senior members of the government in the semi-autonomous region of Puntland have been involved in printing money to raise hard currency for themselves.

But officials in Puntland and in the interim government deny the charges. They say local businessmen sparked the currency crisis by printing more money than they were allowed and then flooding the markets with fake notes.

Since the collapse of Dictator Mohamed Siad Barre's government in 1991, there has been no legal printing of currency. Instead, currency notes have either been printed in the country by factional leaders or printed abroad and imported by individual businessmen.

Mogadishu residents say they will continue protesting until businessmen and shopkeepers agree to accept the Somali shilling unconditionally.