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Top Zimbabwe Ruling Party Legislator Urges Restraint In FX Overhaul

The parliamentary whip of Zimbabwe's ruling ZANU-PF party urged the governor of the central bank Friday to halt the arbitrary arrest of people found to be holding more cash than permitted under a crash currency conversion plan launched this week.

ZANU-PF parliamentary leader Joram Gumbo also asked Reserve Bank Governor Gideon Gono to extend the August 21 deadline by which Zimbabwean individuals and businesses must exchange old banknotes for new, redenominated notes. Gumbo said it would be very hard for those living in rural areas to convert their cash on time.

But Gono has said he is instead thinking of tightening the deadline as operators in the parallel currency market have been finding ways around the roadblocks which police have thrown up on highways across the country to net illegal hoards of cash.

Under regulations promulgated just this week by the central bank, individuals may not hold or exchange more than Z$100 million in old banknotes without documentation of the source of the amount over that limit; for companies the ceiling is Z$5 billion.

The government-run Herald newspaper said Friday that 125 arrests have been made with nearly Z$63 billion allegedly ill-gotten dollars netted by authorities. Around Z$655 billion has been deposited in banks for conversion to Z$655 million new currency.

Reporter Blessing Zulu of VOA's Studio 7 for Zimbabwe asked parliamentarian Gumbo why he has urged the central bank governor to ease up on currency-related arrests and give Zimbabweans more time to exchange old banknotes for new money.

Meanwhile, many of those in possession of large amounts of cash have been pouring it into agricultural commodities like maize and cattle, sending farm prices soaring as much as 150 percent beyond recent levels achieved on the back of hyperinflation.

Economist Luckymore Zinyama, a former National Chamber of Commerce president, explained this as a classic case of too much money chasing too few goods.

Despite the belated public education campaign that the central bank launched after it announced the currency redenomination and reissue operation Monday alongside a 60% devaluation against the U.S. dollar, many consumers remain confused.

Some have yet to see the new currency, but believe it is already worth more than the old one. Reporter Carole Gombakomba spoke with Sithandazile Sibanda of Bulawayo, and Rumbidzai Jaka of Kwekwe said she is still mystified by the new money scheme.

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