… takes the exchange rate war to the streets
BY SHAME MAKOSHRI
RESERVE Bank of Zimbabwe (RBZ) Governor John Mangudya said apex bank will continue its crackdown on black market kingpins to rid the market of delinquent behavior.
In an interview with the Zimbabwe Independent In the aftermath of drastic action against 30 people accused of fueling exchange rate weaknesses this week, Mangudya said the action was important to address economic challenges.
He said raids were carried out following the recent surge in parallel exchange rates and the proliferation of social media ads by foreign currency dealers.
The RBZ chief said the Financial Intelligence Unit (FIU) has launched an operation targeting advertisers with the aim of bringing the perpetrators of the currency attack to justice.
“The operation aims to fully identify and blacklist those forex traders who manipulate the exchange rate in the parallel market for no apparent reason other than to take advantage of profitable arbitrage opportunities and in doing so destabilize the market. economy and fuel inflation, “he said.
“The operation also aims to identify the sources of local currency used to buy currency on the parallel market.
“This report covered the activities that were carried out on September 27 and 28, 2021. The operation is ongoing.
Rate fixers start with the local currency float in the morning which they then use to offer their clients at their predetermined exchange rate, according to the RBZ boss.
He said the goal of the dealers was to create arbitrage opportunities.
“The approach of the FIU has been to penetrate WhatsApp groups, especially early in the morning when dealers still had their Zimbabwean dollar floating around,” Mangudya said.
“The FIU has used the Bank Use Promotion Law, Foreign Exchange Control Law and Statutory Instrument 127 of 2021 which deal with violations such as unauthorized foreign currency trading, money laundering. money, exchange rate manipulation and dirty arbitrage to drive up the rate and thus lead to increases in the prices of goods and services in the economy, to the detriment of the entire economy.
“The FIU has stepped up its investigation to identify, expose and take action against the companies that funded these rate setters,” he added.
Meanwhile, the RBZ boss said this week that the country is expected to post a surplus this year, supported by a strong recovery in the global economy, which is expected to rebound 6% this year.
He said in addition to higher mineral prices, tobacco prices were firm in the last marketing year compared to 2020.
“As a result, the current account is now expected to register a huge surplus of around US $ 1,090.7 million in 2021, up from an initial projection of US $ 611.5 million,” Mangudya said in a 14-page document. sent to the ministry. finances.
He said the current account surplus was due to diaspora remittances and other transfers, which saw the secondary income balance nearly 50% in the first half of this year compared to the same period in 2020.
The central bank chief added that merchandise exports rose 22.8 percent from US $ 2,285 million in the first half of 2020 to US $ 2,590 million in the first half of this year. , thanks to the solid performance of primary exports.
He added that the better performance of the external sector had resulted in an increase in nostro balances in foreign currencies.
“Assuming at least $ 500 million in cash outside the banking sector, this translates to over $ 2 billion in foreign currency holdings against the equivalent of about $ 300 million in reserve easily. available for transactions, ”Mangudya said.
“These developments mean that the country is currently generating enough foreign exchange to support the economy. Under normal circumstances, a strong external sector position signals a stronger nominal effective exchange rate. “