Forex Blog: Currency Trading News & Analysis.

August 17th 2006

Zimbabwe issues new currency

With today’s post, I thought I would take a break from reporting on the major currencies and interest rate speculation, a topic which I feel has been beaten to death. A few weeks ago, Zimbabwe announced that it was issuing a new currency, in order to rein in activity in black market currency exchange. Many countries, including Zimbabwe, with ill-defined economic policies, are often severely constrained in their ability to conduct monetary policy because they don’t know how much cash is circulating. By issuing a new currency, the Zimbabwe government is effectively forcing its citizens to make known the amount of currency they possess, and may enable the country to draft a more practicable economic policy.

Central bank Governor Gideon Gono knocked three zeros off all banknotes and devalued the local dollar by 60 percent in a bid to snuff out a thriving forex black market, where the exchange rate is nearly three times the official one.

Read More: Panic as currency deadline looms in Harare

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Posted by Adam Kritzer | in Exotic Currencies, Politics & Policy | No Comments »

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