By Saliou Samb

CONAKRY, Feb 23 (Reuters) - Martial law and a nationwide general strike have floored Guinea's fragile franc currency, sending prices soaring and threatening to punch a big hole in government finances, economists said on Friday.

As Guinea's second general strike this year entered its 12th day, with shops and businesses shuttered, the U.S. dollar climbed ever higher on "Wall Street" -- the potholed Conakry thoroughfare which serves as the currency black market.

The dollar, which was worth 5,200 francs in late January after the end of the previous strike, jumped to 6,350 francs as Guineans scrambled for safety this week.

"Foreign currencies fell in January after the (first) strike but now they are climbing again as people sell their francs to travel," said one currency trader who identified himself as Mouctar. "In such a climate, people prefer to flee the country."

More than 120 people have been killed and hundreds injured by the security forces during the unrest so far this year in the former French colony, the world's top exporter of bauxite.

President Lansana Conte declared a state of emergency on Feb. 12, the day unions declared a second general strike, saying he had broken a power-sharing deal to end the first stoppage. He sent the army onto the streets and imposed a curfew.

With inflation already at more than 30 percent, the slumping currency has pushed up prices even further, hurting the majority of Guinea's 10 million people who live on less a $1 a day.

Many stallholders in Conakry's central market laid out their merchandise on Friday but prices for everything from fish to cooking oil have soared. A 50-kg sack of rice worth 87,500 CFA francs before the strike now cost 115,000 francs.

"The sellers take advantage of the strike to create an artificial shortage and fix imaginary prices," said Nana Camara, a housewife from Conakry's Kaloum neighbourhood. "When these events are over, they will have to lower their prices."

STRONG DETERIORATION

The economic crisis has stirred concern in government circles, which were hoping to reach an agreement with the International Monetary Fund (IMF) on a first step toward much-needed debt relief.

"The economic situation has strongly deteriorated," National Assembly speaker Aboubacar Sompare told parliament on Friday.

"The foreign exchange rate is sliding and the inflation rate climbs every day," he added.

Officials are concerned the strike could create a major shortfall in the $500 million national budget -- roughly a quarter of which comes from bauxite mining.

A two-week general strike in June caused a loss of $30 million in state revenues, according to the Finance Ministry.

National bauxite firm Compagnie des Bauxites de Guinee has seen roughly a week of production disrupted so far this year between the two strikes.

Controlled by U.S. aluminium giant Alcoa <AA.N> and Canada's Alcan <AL.TO>, the CBG generates four-fifths of the government revenues from the mining sector, or around $97 million.

Aside from lost revenues and the cost of repairing its looted property, the government has pledged to foot the bill for medical costs for those injured in clashes with security forces.

"Budgetary stability will be shattered because there will be important shortfalls to make up while the state's outlays for repairs, treatment and compensation for the injured and funding for an inquiry will rise," said one international economist.

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