Government has continued
to deny responsibility for
what is happening to the economy,
and has instead chosen to blame, as
usual, unnamed ‘economic and
currency saboteurs.
The Reserve Bank of Zimbabwe,
which is responsible for pegging the
forex rate, has gone on a spree,
arresting businesses using the
parallel market rate.
This is not a new phenomenon.
Faced with a runaway inflation in
2008, the then Reserve Bank of
Zimbabwe Governor Gideon Gono,
blamed sanctions, banks, the stock
exchange, parallel currency dealers
and insurance companies. As well as
firing bankers, he blacklisted more
than 20 investment companies and
froze their accounts.
different outcome. On October 6, the
central bank blacklisted 47 more
individuals for allegedly advertising
and facilitating illegal foreign
exchange transactions and money
laundering through social media. This
came after 30 individuals were
"blacklisted and barred from
accessing financial and mobile
telecommunication services for the
The script is still the same as the
same reasons" on Sept. 28, said John
current Reserve Bank of Zimbabwe
governor John Mangudya is still using Mangudya, governor of the Reserve
Bank of Zimbabwe
the same tactics but expecting a
A bit of background…
The Reserve Bank of Zimbabwe (RBZ)
introduced a Foreign Exchange Auction
System in June 2020 in a move that was
initially seen as progressive as it allowed
for what appeared to be a liberalised
approach to buying and selling foreign
currency by business.
Through this auction system, the RBZ
allocates foreign currency that it
expropriates from exporters. The auction
however, started on a false note as the
RBZ still continued to have control of the
exchange rate. This then created two
exchange rates, the RBZ one which
remained generally fixed, and the street
rate, which was quite liquid as it was
driven by market forces. As a result, the
gap between the formal exchange rate and
the parallel market continues to widen
fast. The parallel market reflects more
closely the real value of the local currency
against the US dollar. When the auction
system was introduced in 2020, the
parallel market rate stood at ZWL 80 for
One US dollar, and today it’s anything
from ZWL 150 to ZWL 200 against the US
dollar. The formal exchange rate stands at
One US dollar to ZWL 106.
Businesses are opting to price goods based
on the parallel market rate because the
ZWL is overpriced. To deal with this, the
RBZ implements a litany of measures,
including the arrest and freezing of bank
accounts of those using exchange rates
outside the auction system, or abusing the
auction system.