Zimbabwe eases trade in foreign currency, bond notes
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.
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.