ZIMBABWE’S companies and individuals have exchanged over US$60m on the interbank foreign exchange market on a willing-seller basis since the banning of the multi-currency regime on June 24, latest statistics have shown.
Statutory Instrument 142 of 2019 decreed that the Zimbabwean dollar should be the sole legal tender and removed the multi-currency regime which has been in place since 2009. Since then bureau de changes and banks are trading the greenback at a rate of 1:9 which is slightly below the parallel market which is at 1:10-10.5 although at some point the parallel market seemed to be lagging behind.
At the end of June, the interbank market traded at around 1:8 against the parallel market which dropped to 14 from seven the very same week that Zimbabwean dollar was reintroduced; this saw some people formally trading their money in banks.
Reserve Bank of Zimbabwe governor John Mangudya told Business Times that the interbank platform was doing well as more and more people continue to come with their forex for exchange with the prevailing rate adding that more forex is required to enhance the system.
“Since June 24 this year, the interbank market has been receiving an average of more than US$2 million daily from firms and individuals through walk-ins on the willing seller basis. Though we don’t have the actual figure to date, plus or minus US$60 million has been sold from June 24 due to liberalisation of the interbank system,” Mangudya said.
“Most individuals who are selling forex to the banks are the ones who would have received money from various money agencies from their diaspora relatives and would want for personal use locally.”
In a snap survey conducted by this publication, bureau de changes are doing all sorts of acts to convince forex sellers to trade with them as they offer good rates same as the parallel markets if not better ones.
Mangudya said more licensed forex operators are now fully functional and confident of the interbank system.
Despite the success of the interbank system and trade going on among banks individuals and firms, the country still has serious forex shortages and foreign payments backlogs.
It is estimated that Zimbabwe requires about US$400 million monthly for imports and other functions but less than US$200 million is circulating in the economy causing the forex shortages to persist.
The recent statistics availed by the RBZ show that over US$3 billion of foreign payments were made in the first six months of 2019 and this suggests that most of the payments were made from letters of credits, credit lines and export earnings.
This huge forex gap has caused the fuel queues to continue, crippling power outages and continuous basic commodities price increases.
Economist Gift Mugano said government has to work on production to earn more forex and this will solve all troubles that the country is facing.
“We are not doing enough as a nation as far as production is concerned we can’t continue importing toothpicks from South Africa when we have huge forests like those ones in the Eastern Highlands, hence we need to produce,” Mugano said.
“I can’t believe that the country can go to town after trading less than US$1 billion over a period of five months and the receiving of close to US$60 million from individuals in over a month, these figures show that the confidence is still low and the authorities can’t be
trusted as yet with people’s money.
“The reason that black market is still thriving is that people can sell their money in banks but can’t buy the money back when they want to buy their spare parts from outside the country. If they can allow people to buy, the interbank can be fully functional,” said an economist who preferred anonymity.
The interbank has managed to trade US$740 million from February 22 to mid-July with high volumes coming from fuel dealers and the manufacturing sector which requires forex on a weekly basis.