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| author/source:Zim Online (SA) |
| published:Thu 4-Nov-2004 |
| posted on this site:Thu 4-Nov-2004 |
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| Article Type : News |
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| Hard cash rates now at least 14 percent firmer than before the local unit was slashed from $5 600 to $6 200 against the US dollar |
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Harare - The devaluation of the Zimbabwe dollar last week has only helped stoke up the forex black with hard cash rates now at least 14 percent firmer than before the local unit was slashed from $5 600 to $6 200 against the US dollar. A snap survey yesterday by Zim Online correspondents in Harare, Bulawayo, Beitbridge and the resort town of Victoria Falls - the main hubs of the foreign currency black market - showed the US unit trading at between $7 500 and $8 000. Before the new rate that Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono said was meant to entice the more than four million Zimbabweans working abroad to shun the black market and send hard cash back home through official channels, the greenback was fetching at most $7 000 on the parallel market. The British pound, another sought after currency on the parallel market, was costing about $13 000 per unit before the Zimbabwe dollar was devalued. It now costs $14 500.
Announcing the devaluation during his third quarter monetary policy review last week, Gono indicated that devaluation was part of several measures aimed at undercutting and finally crushing the thriving hard cash black market. But firmer rates on the parallel market have left the official market even more short of foreign currency with the RBZ itself unable to meet industry demands of hard cash of more than US$300 million that have been piling up in the last three weeks. Results from the central bank's foreign currency auction market for the past three weeks obtained by ZimOnline show that of the 4 938 bids, the central bank managed to allot only 515 bids valued at US$31 million and rejected 4 423 bids valued at US$302 967 680.72 in the process. Money transfer agencies also reported a significant drop in business since the new rate was announced. An official at Stanbic Bank Money Transfer Agency said volumes had plummeted significantly with the agency now collecting an average of US$5 000 a day, about half of what they collected before Gono's monetary policy statement. "We understand that the black market is now paying firmer rates than the $6 200 we are prescribed to pay," said the transfer official who spoke anonymously for professional reasons.
A senior manager at Kingdom Bank's Currency King in Harare said the agency was on average collecting about 5 000 pounds per day compared to about 25 000 pounds they were collecting per day before the devaluation. The Kingdom official said: "Since the policy announcement, we have been writing very little business and it may be because of the rates that we are being forced to offer. We could be getting more business if we were allowed to offer rates that are commensurate with the situation on the ground." Another key player on the foreign currency market, Barnfords, said they had not done deals over the past week and that the situation was not looking good. Economic analyst John Robertson said the government should instead expend its energy fixing the supply rather than the exchange rate if it wanted to end Zimbabwe's foreign currency woes. He criticised a new directive issued by Gono on local platinum producers to close offshore foreign currency accounts and redirect deposits to accounts held with local financial institutions. "The new dictatorial policy for platinum producers to close offshore foreign currency accounts was one way that could discourage foreign direct investment and scuttle efforts to raise foreign exchange," said Robertson. Zimbabwe is in the grip of an acute foreign currency crisis that has manifested itself in shortages of essential commodities such as fuel, medical drugs and electricity because there is no hard cash to pay suppliers.
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