LIVINGSTONE MARUFU
THE Reserve Bank of Zimbabwe (RBZ) says it has so far managed to choke the parallel market and has in the process brought foreign currency stability in the economy as over US$600 million has been so far been traded on the interbank system.
Forex parallel market rates have gone down to around US$1:8 from US$1: 14 a fortnight ago. Currently, the interbank forex rate stands at US$1:8,39 against parallel market rate of US$1:8, as more are trading their greenback on the official market.
RBZ governor John Mangudya told Business Times that the enactment of Statutory Instrument 142 of 2019 and strengthening of interbank system had driven the parallel market out of business.
“It’s no longer business as usual for parallel market dealers as the interbank system continues to do well. If you have noticed, from the past week, more and more people are beginning to trade forex formally in the bank,” he said.
“Our formula is to keep pumping money on the interbank to stabilise the forex situation. As companies continue to drawdown from the US$500 million facility we will continue injecting more forex to support the facility. From the drawdown facility, we have injected $220 million.”
RBZ expects the seemingly stabilising forex situation to arrest the rising prices of goods and services.
The interbank market was reintroduced in February this year to allow business to access foreign currency on the official market through trading on a willing-buyer willing-seller platform.
A snap survey by Business Times showed that First Capital Bank was leading the pack buying the greenback at US$1:9,5.
Mangudya said foreign currency was available for key sectors such as fuel and oil producers — to ensure stability on the market.
Economist Persistence Gwanyanya said RBZ’s timely intervention has managed to choke the parallel market but liberalisation of interbank is key in stabilising the forex situation.
“So far the monetary authorities seem to have played their cards well as interbank rates have overtaken the informal rate, thereby pushing more people to queue to sell their forex in the bank. Higher rates which people were looking for at the parallel market are
now at the bank and that increases the appetite to sell forex at the bank,” Gwanyanya said.
“But what I am appealing to treasury is that they should continue liberalising the interbank to do what it wants but some day it will settle down.”
He said some banks are already at US$1:10 and are mopping up large amounts of forex at the expense of traditional banks which are stagnant at US$1:6.
Confederation of Zimbabwe Industries president Henry Ruzvidzo said the interbank system had begun helping the productive sector and called upon other exporters to trade their forex earnings on the interbank to improve productivity.
“The industry has begun to access some currency from the interbank market thanks to the seed capital from the RBZ facility and it is our fervent hope that the system will continue supplying us with more forex to procure critical raw materials,” Ruzvidzo said.
