Friday, 12 October 2018

Good News For Zimbabwe As Black Market Rates Tumble

Parallel market rates plummeted yesterday after Government 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.


Finance and Economic Development Minister Professor Mthuli Ncube on Wednesday said 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.

US$100, which was being exchanged for up to $600 on the illegal foreign currency market on Wednesday evening, plunged to as low as $200 by 7pm last night.

The trend is expected to continue today, with the rates expected to self correct to the pre-monetary policy levels.
Good News For Zimbabwe As Black Market Rates Tumble
Most illegal foreign currency dealers in Harare and Bulawayo were in panic after they bought the US dollar at high rates for resell at a premium.

“Things are not well at all,” said an illegal foreign currency dealer operating close to Eastgate Shopping Mall in Harare. “Rate rawa (plunged) from between $450 and $500 to between $200 and $250.”

Another illegal dealer said they were facing losses after spending more to fetch the greenback.

“Tanyura mudhara (We have incurred losses). We bought it (USD) at a higher value and its value is falling fast against the bond. We are being forced to dispose of it to avoid further losses,” said the illegal foreign currency trader based at Roadport in Harare, speaking on condition of anonymity.

The same situation prevailed in Bulawayo, according to our bureau.

“We are going to go hungry if the situation continues like this,” said a sphatheleni (illegal money changer), who declined to be named. We are going back to the years between 2010 and 2012. No one was bothering to change money as things were fine.

“There were a lot of US dollars on the streets. We are doomed.”

A disgruntled business owner in Bulawayo said she felt short-changed after she bought US dollars at a higher rate hoping to sell them at a premium.

“I have lost out,” she said. “I bought US$1 000. I just feel like I made the worst blunder of my life. I cannot go back to my dealer and ask for my money back. I will just have to wait and see how it goes.”

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.

Minister Ncube, who is in Bali, Indonesia, attending the International Monetary Fund and World Bank meetings, allayed fears over loss of RTGS savings, saying Government had put in place measures to retain value for electronic deposits.

“Government recognises concerns surrounding RTGS deposits and we commit to preserve the value of these balances on the current rate of exchange of 1 to 1 in order to protect people’s savings,” said Prof Ncube in a statement.

He later posted on his Twitter account saying: “Today in Bali, Indonesia at the IMF/World Bank Meetings, I had fruitful discussions with the President of Afreximbank Dr Oramah. Afreximbank has offered Zimbabwe a facility to guarantee 1:1 convertibility of RTGS balances into US$ and availability of US$ for Nostro Foreign Currency Accounts (FCA).”

Prof Ncube could not disclose the value of the back-up facility.

Acting Minister of Finance and Economic Development, Sithembiso Nyoni, yesterday appealed to Zimbabweans to desist from buying goods from the parallel market where prices are exorbitant following the price hike madness gripping the country.

The past week has seen unscrupulous dealers hiking prices of goods and services to unrealistic levels resulting in panic buying by citizens.
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