Eritrea announces Nafka currency replacement

The Bank of Eritrea’s decision to impose a nationwide replacement program for its Nafka currency notes is expected to have a major impact on the economy – and on Eritrean citizens.

The bank announced that all Nakfa notes in circulation must be exchanged for new government-issued notes. According to a news report on VOA (Voice of America), Eritrea's black market is thriving. The currency has been in a state of rapid inflation in recent years, “leading to a large disparity between official and unofficial exchange rates. One U.S. dollar is worth 15 Nakfa at Eritrea’s official exchange rate, but worth 50 to 58 Nakfa on the black market.”

Eritreans who possess large sums of money and work outside of the formal economy have a difficult decision to make: either give up their savings or face serious penalties. They will have to make up their minds quickly. According to sources, the currency redemption program will occur over a six-week period, with the starting date still unknown. The new law restricts bank withdrawals during the six-week period to 20,000 Nakfa and stipulates that all foreigners exchanging money prove that they obtained it legally.

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Image by The original uploader was עוזי ו. at Hebrew Wikipedia, via Wikimedia Commons

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