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FX.co ★ Zimbabwe orders drastic revaluation of currency

Zimbabwe orders drastic revaluation of currency

(RTTNews) - Grappling with continuing hyperinflation, Zimbabwe ordered a revaluation of its currency, the central bank said Monday. The Zimbabwe dollar was revalued at the rate of one trillion Zimbabwe dollars for one dollar. The bank also lifted all restrictions on foreign currency cash withdrawals. The measures were part of the Zimbabwe's drive to introduce transparency in foreign exchange transactions, Gideon Gono, the central bank President said. Zimbabwe has been in the grip of recession for much of the past decade. This has been compounded by hyperinflation estimated at 231 million percent in July 2008. Further, about half the population stood in dire need of emergency food aid, while the country's infrastructure like sewage, water and health systems have all but collapsed. This has provoked contradictory responses from the authorities.

Only last month the Finance Minister had permitted the use of foreign currencies for all businesses including for trading shares on the country's bourse, despite the fact that the stock exchange had remained closed since November 21. According to the new policy announced today, businesses would require foreign exchange licenses, whose cost was likely to vary from USD 12,000 for urban businesses to USD 10 for small vendors. Tobacco farmers will be permitted to retain 100% of their foreign currency earnings while diamond and platinum miners would have to open foreign exchange accounts with Zimbabwean banks.

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