HARARE (Reuters) - Zimbabwe is engaging South Africa over using its neighbour's rand currency to boost foreign exchange liquidity, Prime Minister Morgan Tsvangirai said on Thursday.

South African President Kgalema Motlanthe said earlier this month that Zimbabwe, grappling with inflation which has spiralled to over 200 million percent, rendering its currency worthless, could adopt the rand, but did not give details.

I don't want to pre-empt this, but we are really engaging the South Africans to make sure we can discuss (using the rand) ... to provide relief, Tsvangirai told business leaders.

We are in an emergency situation, a fire-fighting situation. For now we are talking of an emergency plan, he said when asked what Zimbabwe's new unity government was doing to ease an acute foreign currency crunch.

The South African Reserve Bank (SARB) says it has not been formally approached about the proposal.

Namibia, Swaziland and Lesotho all use the rand alongside their own currencies, but SARB Governor Tito Mboweni has in the past ruled out a formal arrangement with Zimbabwe.

Zimbabwe's new government, formed between Tsvangirai's MDC party and President Robert Mugabe's ZANU-PF, is faced with resolving an economic meltdown manifesting itself in hyperinflation which has seen prices double every day.

The Reserve Bank of Zimbabwe bank has repeatedly revalued its dollar and lopped another 12 zeros off the battered local dollar earlier this month.

Zimbabwe's central bank Governor Gideon Gono told the state-run Herald newspaper last week that he welcomes the idea of adopting the rand as an anchor for the Zimbabwe dollar.

However, analysts have cautioned that it would take more than formally adopting the rand to fix Zimbabwe's economy, and doubt whether the Harare government would be prepared to cede control of economic policy to its big neighbour.

The rand is already used widely on Zimbabwe's black market, alongside the U.S. dollar.

Zimbabwe Namibia South African Reserve Bank South Africa