The Reserve Bank of Zimbabwe (RBZ) has commenced the process of demonetizing the Zimbabwe dollar using the United Nations rate as the exchange rate.
Zimbabwe abandoned its hyperinflation ravaged currency in 2009 when it adopted multiple currencies that include the United States dollar, South African Rand, British Pound, Australian dollar, Chinese Yuan and Japanese Yen.
The RBZ has set aside 20 million U.S. dollars for the demonetization exercise, which is expected to be completed by end of this month.
The exercise will ensure that the Zimbabwe dollar is decommissioned and will allay fears of its return. The move is also expected to boost confidence in the banking sector.
In a notice Wednesday, the RBZ said on the notes issued in 2009, walk-in customers will be paid 2 U.S. dollars for 500 Zimbabwe dollars, 40 U.S. cents for 100 Zimbabwe dollars, 20 U.S. cents for 50 Zimbabwe dollars, 8 U.S. cents for 20 Zimbabwe dollars, 4 U.S. cents for 10 Zimbabwe dollars and 2 U.S. cents for 5 Zimbabwe dollars.
On the notes issued in 2008, 40 U.S. cents will be paid for 100 trillion Zimbabwe dollars, 20 U.S. cents for 50 trillion Zimbabwe dollars, 8 U.S. cents for 20 trillion Zimbabwe dollars and 4 U.S. cents for 10 trillion Zimbabwe dollars.
The move is meant to cater for those who were not banked during the hyperinflation era but are still stuck with Zimbabwe dollars.
A minimum of 5 Zimbabwe dollars will be paid for those who had Zimbabwe dollar bank accounts as of December 2008 regardless of whether or not there was any credit in their bank balances. The UN rate of one U.S. dollar to 35,000 Zimbabwe dollars will apply on remaining balances.
Despite attempts to control inflation by legislation and three re-denominations in 2006, 2008 and 2009, use of the Zimbabwean dollar as an official currency was effectively abandoned on 12 April 2009 due to skyrocketing inflation. Enditem