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Harare Devalues Zimbabwe Dollar By 60%, Lops Off Zeros in Forex Plan

Zimbabwe is headed for a massive currency exchange operation in the wake of an announcement by the Reserve Bank that it is cutting three zeros off the nominal value of bank notes with immediate effect, and replacing all notes in three weeks. The bank meanwhile devalued the Zimbabwean dollar by 60% against the U.S. dollar.

Consumers and businesses alike will have to justify their holdings of Zimbabwe dollars over 1 million and 5 billion dollars, respectively, when they turn in old bills. And border posts will tighten inspections to keep offshore black market currency dealers from bringing massive amounts of currency into the country for the trade-in.

Reserve Bank Governor Gideon Gono said new bearer cheques will be out on August 1 and old notes would have to be surrendered in 21 days.

Lopping off zeros is meant to relieve the problems inflation has caused for businesses and others whose software and machines have boggled at long strings of zeros.

Following the devaluation, the Zimbabwe dollar trades at an official rate of 250,000 to the U.S. dollar compared with the previous rate of Z$101,000 per U.S. dollar.

Reporter Blessing Zulu of VOA's Studio 7 for Zimbabwe sought a reaction to Gono's new currency plan from National Chamber of Commmerce President Luxon Zembe.

Economist John Robertson of Harare offered his analysis of the currency situation.

More reports from VOA's Studio 7 for Zimbabwe...