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Sunrise of currency reform - Index of articles and reports on Zimbabwe's new currency reforms
Zimbabwe on shopping spree before currency switch
Business
Day (SA)
August 21, 2006
http://www.businessday.co.za/articles/world.aspx?ID=BD4A253658
HARARE — Nervous
Zimbabweans have gone on a reluctant shopping spree ahead of the
phasing out of the country’s old bank notes today.
Consumers have
stocked up on bulk goods — from coffee to toilet paper. Wealthier
Zimbabweans also splurged on new cellphones, clothing, and household
and electronic items, shop owners said.
The changeover
to a new range of bills comes after the central bank struck three
zeros from the old notes in the hyperinflation economy and earlier
this month began issuing the new denominations — these include bills
for cents, an absolute rarity in world currencies.
Many Zimbabweans
were left with old notes they cannot exchange. Those notes are to
become obsolete at the close of business today.
Businessman
John Letherby bought 10 bottles of whisky at a liquor store in the
Newlands suburb of Harare.
"I have
already changed my limit into new notes. I will have to look at
the scotch as an investment," he said.
With inflation
at about 1000%, the price of whisky has more than doubled in the
past two months.
Under the changeover
rules, individuals were permitted to exchange 100-million in old
Zimbabwe dollars (US$40) for new currency in a single transaction
each week since the beginning of the month.
Those carrying,
or attempting to exchange, more than Z$100m in old notes were required
to prove that they had earned or received the money legally.
Businesses were
allowed to exchange Z$5bn in old bills each week.
The central
bank said these measures were a bid to prevent rampant money laundering.
Analysts also
dismissed a government decision to slash fuel prices for private
motorists by almost half, saying the measure was cosmetic.
"While
the price has been reviewed upwards from the previous official price
of Z$230, the new rate is still below the parallel market price
of Z$600-Z$800," said Prosper Chitambira, an economist with
the Zimbabwe Congress
of Trade Unions.
"Although
the price might reduce speculative behaviour by some players, the
new price is below break-even point for private importers, which
might lead to shortages in the long term." Experts on Friday
said that the move could lead to further fuel shortages and would
fail to snuff out a flourishing black market.
"Government
and the oil industry have, with immediate effect, fixed the price
of diesel at Z$320 (US$1,28) and that of petrol at Z$335 a litre
for all users in the country," the state-run Herald daily newspaper
said in its Friday edition.
Petrol stations
earlier this month unilaterally increased prices, selling a litre
of petrol at between Z$600 and Z$800 a litre, resulting in a steep
increase in public transport costs.
The cabinet
approved the cuts a week earlier. The newspaper cited Energy Minister
Mike Nyambuya as having said: "These are the prices my ministry,
together with the oil industry, agreed on and are applicable immediately."
In May, Zimbabwe
signed a US$50m loan deal with French bank BNP Paribas to buy fuel
and allow Noczim, the national oil company, to import fuel for the
private and public sectors.
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