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Zimbabwe Central Bank Puts Off Issuance Of New Currency To 2008

Zimbabwe will not issue a new currency this year according to an interview with the head of the central bank published in a state-controlled newspaper on Sunday.

Reserve Bank of Zimbabwe Governor Gideon Gono told the Sunday Mail newspaper that "although all the preparations are in place" for the issuance of a new currency to cope with the country's 8,000% inflation rate, "the launch is not until next year."

Gono announced Oct. 1 that a new currency was coming "very soon," warning foreign exchange speculators trading on the parallel market that the forthcoming operation, a repeat of a 2006 currency overhaul, would catch them holding useless notes.

But he told the Sunday Mail his institution would instead concentrate on stimulating the supply side to encourage the flow of scarce goods into the formal sector, devastated earlier this year when the government abruptly imposed price cuts in late June.

Gono in the interview did not address inflation, but warned Zimbabwean firms against indexing prices of their goods to foreign exchange rates on the parallel market. Such rates have become key pricing factors because companies must obtain hard currency to source imported goods or purchase essential raw materials for production.

The Zimbabwe dollar is currently trading at a rate of 1 million to the U.S. dollar.

Harare economist Prosper Chitambara told reporter Blessing Zulu of VOA's Studio 7 for Zimbabwe that central banker Gono is right to postpone the launch of a new currency – though not for the same reasons given by the monetary official.

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