UN pushes U.S. dollar as E. Timor currency

UN pushes U.S. dollar as E. Timor currency

DILI (AP): The UN administration in East Timor announced plans
Friday to push for the enforcement of the U.S. dollar as the
official currency in the territory.

The head of the UN Central Payments Office, which manages East
Timor's tiny and shattered economy, told reporters the world body
was taking legal and educational steps to ensure the currency
becomes the sole legal tender.

"In order to address the implementation of the dollarization
more fully, a program has been developed (which) will have
political, legal and operational elements," said Fernando
DePeralto.

The UN has governed the territory since a 1999 vote for
independence from Indonesia, which occupied East Timor in 1975.

In January 2000, the UN administration introduced the U.S.
dollar as the official currency in East Timor. A dozen countries
and territories around the world already use the U.S. currency,
including El Salvador, Ecuador, Guatemala and Panama.

However, despite the UN decision, the Indonesian rupiah and
Australian dollar have remained in widespread circulation in the
territory.

Although the world body pays its staff in U.S. dollars, many
Australian-run businesses prefer to price goods in the Australian
currency. And many East Timorese continue to use rupiah to buy
cheap Indonesian goods.

DePeralto said he hoped a campaign to educate people about the
U.S. dollar would encourage its greater use.

Hundreds of thousands of coins - including almost 100,000
cents - will be imported to facilitate commerce.

The import of foreign currencies will also be prohibited,
DePeralto said.

The UN also will ban unlicensed money changers. They illegally
bring in rupiah into East Timor to exchange for U.S. dollars,
where the rates are lower than in Indonesia.

U.S. dollars are then smuggled back into Indonesia.

DePeralto warned that some inflation was inevitable. "Shifting
from one currency to another with different denominations will
create inflation," he said.

The push to enforce the use of U.S. dollars is likely to anger
the some 400 moneychangers who work on the streets of Dili.

"Young people change money because they don't have real jobs.
If the UN wants us to stop, they have to give us a salary," said
John da Silva, a currency dealer.