Zimbabwe set to end use of defunct currency in Sept.

The Reserve Bank of Zimbabwe (RBZ), or Zimbabwe's central bank, has set June 15 as the date for which demonetization of the Zimbabwe dollar begins, running until the end of September.

A statutory instrument is due to be published in the Government Gazette on Friday to give the process legal effect.

RBZ governor John Mangudya told journalists Thursday that all cash payouts would be exempted from bank charges and government tax, and would be disbursed on a "no questions asked" basis.

Zimbabwe introduced multiple currencies, mainly the U.S. dollar, South African rand and Botswana pula, to stem hyperinflation which, according to official figures stood at 231 million percent in 2008, although other quarters put it at over 4 billion percent. The government dumped the local currency the Zimbabwean dollar in April 2009 but has not come up with a scheme to demonetize the currency until now, leaving Zimbabweans with stacks of useless notes stored at home or at their bank accounts.

According to the demonetization exercise, bank accounts with balances of zero to 175 quadrillion Zimbabwe dollars will be paid a flat 5 U.S. dollars, while those above 175 quadrillion dollars will be paid the equivalent value of 1 U.S. dollar to 35 quadrillion dollars (or 1 U.S. dollar to 35,000 dollars revalued).

"The banking public should visit their banks to establish the balances which were in their accounts. We have interacted with the banks and they still have all the information, which we as the Reserve Bank also authenticated," Mangudya said.

Walk-in customers who still had Zimbabwe dollars stashed in their homes and business premises will get an exchange rate of 250 trillion to 1 U.S. dollar for the 2008 notes and 250 dollars to 1 U.S. dollar for the 2009 note series.

Cash customers will get their exact U.S. dollar equivalent of the converted amount from 1 U.S. cent up to 50 U.S. dollars, and where the equivalent exceeds 50 dollars, payment will be made through their bank accounts.

Corporate customers will have their U.S. dollar equivalents credited into their bank accounts.

Mangudya assured those that had made deposits into their accounts after Dec. 31 2008 up to end of March 2009 when the multiple currency regime was fully adopted would also benefit from the decommissioning of the Zimbabwe dollar.

The government said it had allocated 20 million U.S. dollars for the demonetization.

Many people have expressed joy at being given value for the Zimbabwe dollar deposits which had been stuck in banks since 2009, even though they say the values to be given are too low.

"This process will bring closure to the issue of the our monies which were stuck in the banks. Even though I will get less than I had anticipated, this is better than nothing at all and we now need to move forward," said Tonderai Murwira.

Mangudya also reiterated that the use of foreign currencies would only be discontinued when the country met certain macro- economic fundamentals, including sustainable foreign exchange reserves of up to one year, low and sustainable interest rates, confidence building in the consumer, business sectors and financial sectors and job creation. Endi