Financial Gazette (Harare)
Dumisani Ndlela
8 May 2008
Harare — THE official foreign currency market burst into life this week as Zimbabweans trooped to banks and money transfer agencies (MTAs) to offload their hard currencies, rocking the once-thriving parallel market, the major beneficiary of the country's currency crisis.
There was an unprecedented shift in allegiance as hundreds of people streamed to authorised dealers to offload their foreign currency for Zimbabwe dollars, shunning the parallel market where exchange rates struggled to catch up with those on the inter-bank market following exchange control reforms that let up currency pricing to market forces Scores of people huddled in banking halls or outside, ignoring the long queues as they desperately sought to cash in from higher rates on the official market.
All banks, except CFX Bank, were offering foreign currency sellers Zimbabwe dollar equivalent in cash for foreign currency amounting to up to US$150.
CFX, which struggled for customers when the other banks were overwhelmed, was only giving cash of up to $5 billion and the balance through deposits or bank transfers.
Rates surged from the initial $160 million per United States dollar pegged at the start of the new foreign currency policy on Friday to close to $200 million at most banks.
The official rates had been fixed at $30 000 to the US unit prior to the latest reforms.
CBZ Bank was buying the greenback at $185 million, while Barclays Bank's offer was higher at $189 million.
Stanbic Bank, FBC Bank and ZABG Bank were buying the US unit at $188.7 million, $183 million and $199.5 million respectively.
Standard Chartered Bank was buying the greenback at $199 million, although bank officials said they had stopped trading owing to a systems breakdown when The Financial Gazette visited their banking halls yesterday.
ZABG had also run out of cash but trading resumed in the afternoon.
CFX's rates were pegged at $190: US$1.
Kingdom Bank was offering a rate of $193 million for the US dollar for cash transactions, and a rate of $197 to the greenback for transfers.
The Reserve Bank of Zimbabwe (RBZ)'s money transfer agent was buying the US dollar at $190 million.
Yesterday. RBZ governor Gideon Gono warned of risks associated with the liberalisation of the exchange rate, as the market may be susceptible to an influx of counterfeit foreign currency notes.
"Increased foreign exchange trading activities may inadvertently attract persons with criminal intent, and prejudice innocent persons of their hard earned foreign currency. In this connection, the Reserve Bank of Zimbabwe would like to advise the public to exercise caution in their foreign currency dealings.
"The public is further advised that the formal systems, which include authorised dealers, MTAs, foreign exchange purchasing centres and Homelink centres, provide a safe, secure, convenient, transparent and reliable platform for foreign currency trading.
"In addition to systems already put in place to deal with money laundering in the financial sector, the Reserve Bank of Zimbabwe has also put in place stringent measures to ensure that all institutions licenced to purchase foreign currency from the public, have the requisite risk management structures and equipment to detect counterfeit notes," said Gono.
Parallel market dealers and cash barons were left stunned by the surge in rates, but vowed to remain defiant, saying they would continued moving rates to compete with the inter-bank market.
By yesterday, the parallel market rate for the US dollar had shot up to $180 million, from between $98 million and $100 million before the inter-bank market started trading under the new regime.
"We're offering convenience - no queues and you can call us to change your money from your office," a parallel market dealer said.
However, he admitted trade on the parallel market had been held back by the resurgence of the official market, but hoped it would rebound.
A dealer with a local bank said exporters were also trekking to the market to sell foreign currency.
"They are coming," said the dealer, who could not, however, give figures because she is not authorised to do so.
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