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Zimbabwe's Central Bank Snips 10 Zeros In Currency Redenomination

In a much anticipated monetary policy statement, Reserve Bank Governor Gideon Gono announced Wednesday that the central bank will tackle the effects of hyperinflation by rolling out new currency while slashing 10 zeros from denominations now in circulation.

Correspondent Sylvia Manika reported on Gono's monetary policy statement.

Economists said the redenomination is necessary, but won’t put the brakes on hyperinflation which one estimated to be running now at 100 million percent on a 12-month basis.

Economist Godfrey Kanyenze of the Labor and Economic Development Research Institute of Zimbabwe said the zeros will return sooner than the last time they were slashed, in 2006, as the rate of inflation is far higher now than it was at that time.

Informal foreign exchange markets took the currency announcement in stride, with the local currency trading at Z$110 billion to the U.S. dollar in Harare, Bulawayo and Mutare, much as in trading the day before. Existing bills won't expire until December 31 although the new currency regimen will go into force on Friday, August 1.

Independent economist John Robertson agreed the zeros will soon be back on notes without a concerted effort to tackle the root causes of hyperinflation.

Bulawayo-based journalist Jonah Nyoni commented that what needs to be removed is not the zeroes from the currency but the leadership of the country.

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