Zim­babwe eases trade in for­eign cur­rency, bond notes

The Star Early Edition - - NEWS - Tawanda Karombo

ZIM­BABWE has low­ered li­cence fees for for­eign ex­change bu­reaus by 50 per­cent and in­vited ap­pli­ca­tions from cor­po­rates and in­di­vid­u­als in­ter­ested in of­fer­ing ex­change ser­vices for global cur­ren­cies as well as for lo­cal bond notes the coun­try in­tro­duced last year.

The Re­serve Bank of Zim­babwe (RBZ) said it was seek­ing to li­cence more par­tic­i­pants to of­fer for­eign ex­change bureau ser­vices. An­a­lysts say this will help re­tain for­eign cur­rency in­side Zim­babwe at a time when the econ­omy is cash starved.

“Bu­reaux de ex­change would nor­mally work to smoothen trade and al­low peo­ple to quickly and for­mally ex­change cur­ren­cies for trade, trav­el­ling and other pur­poses. In Zim­babwe’s case, these would help to keep the money cir­cu­lat­ing in the for­mal econ­omy,” said econ­o­mist Moses Moyo.

The bank’s di­rec­tor for ex­change con­trol, Farai Masendu, said: “Cur­rently, there is a lim­ited num­ber of li­censed bu­reaux de change with the ma­jor­ity of ur­ban cen­tres, in­clud­ing ports of en­try/ exit, hav­ing no for­mal bu­reaux de change ser­vices.”

The bank has halved head of­fice, ur­ban and ru­ral branch fees for the bu­reaux de change to $500 (R6 700), $200 and $50 re­spec­tively as the coun­try con­tin­ues to use a bas­ket of world cur­ren­cies that in­clude rand, pula and Bri­tish pound among oth­ers. The RBZ said more bu­reaux de ex­change would en­hance ac­cess to for­mal ser­vices for ex­change of cur­ren­cies in the coun­try’s multi cur­rency sys­tem.

The bank said it had in­jected about $160 mil­lion in bond notes into cir­cu­la­tion, but banks are still un­able to meet de­pos­i­tors’ de­mands, say ex­perts.

Com­pa­nies that im­port raw ma­te­ri­als and other goods have to pur­chase for­eign cur­rency on the streets as the cen­tral bank has a back­log of for­eign cur­rency al­lo­ca­tions.

Data has also shown that hard cash in the com­mer­cial bank­ing sys­tem fell from $260.4m in Jan­uary 2015 to $173m in Jan­uary 2016 and to a low of $73.9m by the end of April 2017, with about $64.14m of this in for­eign cur­rency.

This com­pares to about $6.55 bil­lion in de­posits in the bank­ing sys­tem, im­ply­ing a cash to de­posit ra­tio of around 1.3 per­cent.

ATM trans­ac­tions have fallen dra­mat­i­cally from $331.5m in Jan­uary 2016 to $39.3 in April 2017, a re­flec­tion of the ab­sence of cash in the econ­omy, said a re­port by IH Se­cu­ri­ties this month.

PHOTO: EPA

A man holds a wad of $2 bond notes in Harare, Zim­babwe, that had been in­tro­duced last year to ease se­vere cash short­ages. The bond notes are at par with the US dol­lar.

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