1st Ld: Zimbabwe takes drastic moves to retain greenback in cash crisis

Zimbabwe's central bank on Wednesday announced a package of drastic measures to retain the U.S. dollar, the main circulation currency in the country, which include imposing withdrawal limits, converting corporate import receipts to other currencies, and introducing bond notes.

John Mangudya, Governor of Reserve Bank of Zimbabwe, the central bank, told a press briefing that starting Thursday, individuals will also be restricted in taking cash out of the country, with a maximum limit of 1,000 U.S. dollars or 1,000 euros in cash.

A foreign exchange priority list to guide banks in the distribution of foreign currency had also been crafted, under which obtaining the American greenback from banks will be difficult for college students who study abroad and importers of goods and services already available in Zimbabwe.

After a hyper-inflation that crushed the local currency in 2009, Zimbabwe has been using the U.S. dollar as the main currency in circulation. Though the authorities have given eight other foreign currencies as legal tenders, the market is still dominated by the U.S. dollar.

But the market was hit by several shortages of the U.S. dollars in recent years, the latest one starting January this year.

Mangudya said the authorities will introduce bank notes, in denominations of 2, 5, 10, 20 dollars, backed by a 200-million-U.S.-dollar facility provided by Africa Export Import Bank (AFREXIM). The bank notes, however, stoke fresh fears that the authorities are on its way to introduce a new local currency.

The governor added that 40 percent of all new foreign exchange receipts in U.S. dollars from the export of goods and services, including tobacco and gold sale proceeds, shall be converted by the central bank at the official exchange rate to South African rands and 10 percent to euros. Endit