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Reserve bank exchanging Zimdollar with US Dollar

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The Reserve Bank of Zimbabwe yesterday invited people holding on to Zimbabwe dollar notes to bring them to banks starting on Monday in exchange for US dollars.

A Statutory Instrument which gives legal effect to the retirement of the local unit will be gazetted today, as part of the central bank's efforts to remove the legal status of the local currency.

The decommissioning of the Zimbabwe dollar will run until September 30, while banks will also pay the equivalent US dollar amount for each account balance as at December 31, 2008.

RBZ governor Dr John Mangudya said at a Press conference yesterday that notes not exchanged until September 30 will be considered to have been demonetised.

"This policy intervention is necessary to buttress Government's commitment to the multiple currency system. We, therefore, need to safeguard the integrity of the multi-currency system or dollarisation in Zimbabwe. Demonetisation is critical for policy consistency and for enhancing consumers' business confidence," Dr Mangudya said.

The Government adopted a multi-currency system in February 2009 in response to spiralling inflation which reached 231 percent at the last official count in July 2008 after the decimation of the Zimdollar by ravages of sanctions.

Zimbabwe now uses a basket of currencies which includes the US dollar, South African Rand, Botswana Pula, British Pound, Euro, Chinese Yuan, Japanese yen and Austrian dollar.

Zimdollar notes holders will exchange them at any bank, building society, POSB and Zimpost. For walk-in clients, the process is split into two categories involving the last sets of notes issued in 2008 and 2009.

Denominations of between ZW$5 and ZW$ 500 will be paid for at US dollar exchange rates of up to US$2. The rate for ZW5 will be US$0,02, ZW10 at US$0,08, ZW20 at US0,08, ZW$50 at US$0,20, ZW100 at US$40c and ZW$500 at $2.

During 2009, the RBZ slashed 12 zeros from the local currency as hyperinflation continued to erode its value and the removal of the zero resulted in ZW$1 trillion becoming one Zimdollar.

Under the second category, notes issued in 2008 ranging from ZW$10 trillion to ZW$100 trillion to be paid for at the US dollar exchange rate of up to US$0,40, Dr Mangudya said.

The ZW$10 trillion will fetch US$0,04, ZW$20 trillion US$0,08, ZW$50 trillion US$0,20 and ZW$100 trillion will be offset at a rate of US$0,40.

Cash customers will get their exact US$ equivalent of the converted amount, starting from US$0,01c up to $50 and where the US$ equivalence exceeds US$50, payments will be made through banks.

Corporate customers' US$ equivalents will be credited into their bank accounts. For account holders, banks will pay the equivalent US dollar amount for each account balance as at December 31 2008.

Account balances of zero to ZW$175 quadrillion will be paid flat US$5 and those above will be paid the equivalent value after applying the UN exchange rate of US$1/ZW$35 quadrillion or US$1/ 35 000 revalued.

Customers whose banks were placed under curatorship will deal with curators, while institutions that were placed under liquidation will deal with the Deposit Protection Corporation.

Dr Mangudya reiterated that the return of the Zimbabwe dollar would only be considered when key economic fundamentals such as productivity in key sectors have been achieved.

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