ZIMBABWE: Government To Remove Local Dollar From Circulation

Zimbabwe's government has announced it will officially discard the Zimbabwean dollar. Hyper-inflation had rendered it near worthless, making the US dollar the most widely used currency.

The central bank said virtually worthless Zimbabwean dollars will have to be exchanged for US dollars from next Monday.

The bank says account holders with balances of up to 175 quadrillion Zimbabwean dollars will be paid 5 US dollars (4.45 euros). Those with balances above 175 quadrillion dollars will be paid at an exchange rate of $1 to 35 quadrillion Zimbabwean dollars. Customers have until September to exchange their notes.

The southern African country started using foreign currencies like the US dollar and the South African rand in 2009, after the Zimbabwean dollar was ruined by hyper-inflation, which had hit 500 billion percent in 2008.

"Zimbabwe adopted the multiple currency system, or dollarization in 2009 and it is therefore necessary to demonetize the Zimbabwe dollar unit," Reserve Bank of Zimbabwe governor John Mangudya said at a news conference. "We are decommissioning this currency."

At the height of Zimbabwe's economic crisis in 2008, Zimbabweans had to carry bagfuls of banknotes to the shops to buy basic goods like bread and milk. Prices were rising at least twice a day.

The highest and last banknote to be printed by the central bank in 2008 was 100 trillion Zimbabwean dollars, which was not enough to take the bus to work for a week.

Once called the breadbasket of Africa because of its fertile land, Zimbabwe has endured a decade-long financial crisis, which is largely due to President Robert Mugabe's land reforms. They all but destroyed the country's agricultural sector - the backbone of its economy.
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