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Zimbabwe Postpones Phase-Out of 200,000 Dollar Notes

Zimbabwe's central bank has postponed the phase out of its 200,000 Zimbabwean-dollar notes a few hours before it was to take effect. The announcement came amid chaos at banks as Zimbabweans struggled to redeem the currency. VOA's Scott Bobb reports from our Southern Africa Bureau in Johannesburg.

The head of Zimbabwe's Central Bank, Gideon Gono, Monday told reporters in Harare that the 200,000 Zimbabwean dollar notes would continue as legal tender until a future date, which he said would be announced later.

Gono said that banks and businesses are required to continue accepting the notes as legal tender. He said the extension was necessary because heavy rains in part of the country had hindered the distribution of new, higher-denomination notes.

The 200,000 Zimbabwean dollar note is worth about $8 at the official exchange rate, but less than 15 cents on the parallel market. The Zimbabwean currency has been losing value daily as a result of inflation that economists say has surpassed 8,000 percent per year.

Two weeks ago the central bank announced the 200,000 dollar notes would be phased out as higher denomination notes were being introduced. The highest denomination, 750,000 Zimbabwean dollars, is currently worth about $25 on the official market, but less than 40 cents on the parallel market.

There were long lines at banks and financial institutions as consumers rushed to redeem the old notes before they were supposed to have lost all value.

But shortages of the new notes obliged some banks to continue to issue the old notes.

Many shop owners reportedly closed their stores Monday because of confusion over the currency exchange.

The government said it had injected 33 trillion Zimbabwean dollars into the economy to ease the currency shortage. But critics said this was not likely to help for long because of the free-fall of the currency's value, which they said would be aggravated by the injection of more cash into the economy.

The Zimbabwean economy has been in a state of crisis characterized by hyper-inflation and shortages of food, fuel, and hard currency. The unemployment rate is estimated to be 80 percent, while gross domestic production has declined by an estimated 30 percent in the past seven years.