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Complete Pandemonium
Today - the day after Gideon Gono, the Governor of the Reserve Bank,
announced the reduction of the numerical values of the Zimbabwe dollar
by
three digits, has been characterized by chaos and confusion.
Barclays Bank and Beverly closed their doors; Standard Bank traded but
advised their clients to write Cheques using the new denominations with
the
endorsement 'Revalued' on the cheque. Zimbank simply traded as normal -
refusing to issue the new currency. Major firms closed for the day to
try
and sort themselves out before reopening. Others refused to accept
Cheques
and the 'old currency' which technically now is illegal tender. Others
simply continued trading as if nothing had happened.
Everywhere the business community was trying to sort out what to do -
close
their accounts, take stock, get balances from the Bank and then reopen
with
a new set of accounts and data on their computers. How to work the new
numbers with Cheques still coming in and both types of currency in
circulation?
The new notes have not put in an appearance yet but it is clear that
when
they do this will create yet more confusion - they are in the following
denominations (all paper 'bearer bonds': -
1 cent, 5 cents, 10 cents, 50 cents, 1 dollar, 5 dollars, 10 dollars
etc. up
to 100 000 dollars. The first note is worth 10 'old' dollars, the last
is
worth 100 million 'old' dollars. The cost of printing the smaller
notes,
which will be virtually worthless, must have been at least 50 new
dollars
per note (50 000 'old' dollars) so the loss on this operation must run
to
many billions of 'old' dollars. A complete waste of money as the only
unit
that makes any sense is the 1 dollar note and even then this is so
small as
to be a nuisance. The 100 000 note will attract the forgers big time!
It is clear there was very little consultation and planning for this
huge
exercise. I am told the Police have desended on Beitbridge in force to
stop
people bringing the missing trillions back into the country! I feel
sorry
for all who must now go through the hoop at the border posts. What a
waste
of time and energy.
One immediate casualty - the parallel market has gone crazy, the dollar
is
trading at 80 000 to 1 on the Rand, 750 000 to 1 on the US dollar and
over a
million to the pound Sterling. It is still moving and goodness knows
where
it will end. The slashing of interest rates will force surplus money
into
the stock market and we can also expect equitiesd to go into the
stratosphere. Fuel is trading in a confused market at 600 000 'old'
dollars
today.
Eddie Cross
1st August 2006
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