ACCRA (Reuters) - Ghana's cedi currency was redenominated on Tuesday, shedding four zeros, in a move intended to make life easier for shoppers and business people fed up of carrying large bundles of cash that make them easy prey for thieves.
One new cedi -- a name derived from the local word for the cowrie shells once used as currency in West Africa -- is worth 10,000 old cedis and is divided into 100 pesewas.
Bouts of hyper-inflation over the past three decades have forced the West African nation to issue progressively higher-denomination notes, but inflation and the cedi's exchange rate have stabilised in the last few years.
"The redenomination is intended to make a legacy of the past history of high inflation and macroeconomic instability," said Alex Bernasko, who chairs a committee set up by the Bank of Ghana to organise the change.
New "Ghana cedi" notes, which will circulate with the old cedi for the next six months, will make it easier for people to withdraw and carry large sums of cash and reduce theft, he said.
The new cedi's largest note is now 50 new cedis or about $50. Previously it was 20,000 old Ghana cedis or barely $2.
QUEUES
Long queues formed outside cash machines on Tuesday morning in the capital Accra as customers examined the crisp new notes which carry pictures of Ghana's independence leaders.
"It is a very good idea ...I won't have to carry big bags full of money. It was dangerous," said Michelle Zinsou, on her way to work in Accra.
T-shirt vendors and hawkers in central Accra struggled to convert prices into the new currency.
"This is 20,000 (old Ghana) cedis," said vendor Christy Asibi, 20, pointing to a black scarf. "In new Ghana cedis, I don't know. Maybe 20,000 pesewas?"
It will take time to adjust, said 35-year-old taxi driver Michael Lordford. "Some people are not educated. Even the educated people will find it difficult," he said.
Some Ghanaians, scarred by devaluations, fear they will lose out in the switchover, despite a long advertising campaign that has stressed the "value will be the same".
The country's 800,000 cocoa farmers will now get about 57 new Ghana cedis, the equivalent of 570,000 old cedis, per bag of cocoa, which buyers said may spark confusion in the world's No. 2 grower.
But for buyers who are used to sending purchasing clerks to the bush to buy cocoa with currency worth hundreds of thousands of dollars, the bigger notes are welcome.
"All of the companies use cash to buy cocoa, we won't have to put cash into jute sacks to send to the field anymore," one buyer said.
Ghana has seen falling inflation and steady growth in recent years. Economic growth of about 6 percent is forecast for 2007, though hopes of bringing inflation under 10 percent have been eroded by chronic power shortages.
Critics fear the redenomination may force prices higher as vendors round prices up, but analysts say it is long overdue.
"The perception that we have a very stable economy and a stable currency will be entrenched. Over the last six years, the cedi has been very stable," said Databank economist Daniel Tetteh.
"People will have respect for the cedi and be more inclined to hold onto it and invest in cedi assets," he added.
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