Black market rates nosedive 1:1,5 ‘Craft policies to crush illegal forex deals’
PARALLEL market rates further plummeted to as low as US$1:RTGS/Bond1,5 this week from a peak of 1:6 in the last two weeks as Government forges ahead with implementing measures to stabilise the economy.
Government has guaranteed the 1:1 convertibility value of Real Time Gross Settlement (RTGS) balances into the United States dollar, as well as availability of the greenback for Nostro foreign currency accounts. These are being complemented by a fight against graft, which has seen the apex bank this week suspending four senior executives following allegations of corruption and illegal foreign currency dealings.
The police have also cracked the whip on illegal forex dealers, popularly known as osiphatheleni, in a blitz that has seen at least 170 suspects being arrested so far this week.
A snap survey in Gweru and other major cities this week revealed that the parallel market exchange rate was at its lowest.
At Chicken Inn in the Central Business District (CBD) in Gweru, US$100, which was being exchanged for up to $500RTGS on the illegal foreign currency market recently, was going for as low as $150 bond.
At Post Office at Mkoba 6 shopping centre, it was the same story with the US dollar trading at 1:1,5.
Residents and illegal foreign currency dealers were in a hurry to dispose of their foreign currency GOVERNMENT should craft policies that will weed out illegal foreign currency dealings and ensure a sound financial sector that supports national economic growth.
This emerged during a public consultation on the 2019 national budget held at Charles Austin Theatre in Masvingo on Wednesday. The consultation process is being spearheaded by the Parliamentary Portfolio Committee on Budget and Finance across the country’s provinces. Input from the consultative process will be used to craft the national budget statement to be presented by Finance and Economic Development Minister Professor Mthuli Ncube sometime next month.
In their contributions participants said the budget should tackle rampant currency distortions in the market, which have resulted in price increases and shortage of basic commodities.
“The 2019 national budget statement should inform legislative measures to curb illicit financial deals that include illegal money changing. Money changers should be arrested and stopped from
as they were uncertain about the future value of especially the US dollar. Experts have said the trend is expected to continue with the rates expected to self correct to the pre-monetary policy levels.
“I bought a lot of US dollars at high rates for resell at a higher rate. Just last Monday we were buying at 1:4 while some were buying at 1:3 and this operating as they contribute to our suffering,” Consumer Council of Zimbabwe (CCZ) provincial chairman, Mr Jowere Mukusha, said.
He also called on Government to consider “dumping” the bond note, which he said was being abused by economic saboteurs to manipulate the exchange market and cause price distortions.
“I think if Government returns to the use of the United State dollar, we can easily deal with illegal money changers. The United States dollar is in high demand and money changers are happy as they make money but if we stop using bond, these people will stop tormenting us.”
The participants suggested creation of a contingency fund to facilitate adequate supply of basic commodities in times of crisis. They said Treasury will have to stabilise the currency market in order to curb parallel market exchange rates, unjustified price increases and restoration of business confidence.
Government has already crafted the Transitional Stabilisation Programme (TSP), which details economic recovery strategy towards a middle-income economy by 2030.
Masvingo City Council Ward 7 Councillor,
morning the rates have tumbled and we are now buying at 1:2 or if I hit a jackpot 1:1,5,” said an illegal foreign currency dealer outside Chicken Inn outlet in the CBD.
Other illegal foreign currency dealers said their source of bond notes had without explanation told them that they were no longer supplying any float money.
“My boss from Harare said he is no longer in a position to supply me with bond notes. That’s the case with most of us here. We were fed from Harare and we don’t know if this is a result of the suspension of the RBZ bosses. Some familiar faces (dealers) are not here today. Only time will tell,” said another illegal foreign currency dealer on condition of anonymity. Richard Musekiwa, said the budget statement should consider the plight of local authorities and prioritise foreign currency allocation to them.
“Last year Masvingo City Council offered a tender to Willowvale Motor Industries, to supply eight service vehicles but that deal has since been cancelled because we could not get the needed foreign currency from RBZ. We wish the 2019 national budget statement will recommend that local authorities be given a priority on foreign currency allocation,” said Clr Musekiwa.
Mr Norman Mutizwa of Great Zimbabwe University also said the national budget statement should put in place effective mechanisms, which would help in cutting on public expenditure to avoid budget deficit.
“If my memory serves me well, our budget deficit for 2016 was about 1,6 billion and in 2017 the figure was the same but before year end this year, we have reached about $1,7 billion.
“This is uncalled for, let us have financial prudence and learn to live within our means by not spending what we do not have, as a nation. Let us cut on unnecessary expenditure,” said Mr Mutizwa. — @walterbmswazie2.
Finance and Economic Development Minister Professor Mthuli Ncube is on record as saying Government had secured a loan facility from the Afreximbank to guarantee the 1:1 convertibility value of Real Time Gross Settlement (RTGS) balances into the United States dollar and the availability of the greenback for Nostro foreign currency accounts.
The availing of the Afreximbank facility followed widespread fears over loss of value for RTGS or electronic balances at banks on the back of spiralling parallel market exchange rates. The situation has been compounded by unjustified price increases, which have seen some retailers increasing prices by more than 50 percent, despite the fact that producers have not increased prices.