Inter-bank, parallel market rates won't converge: Analysts

ANALYSTS say claims by monetary and fiscal authorities that the interbank market and the parallel market for foreign currency will converge are highly unlikely in the absence of a sustained supply of foreign currency.

Both the Minister of Finance, Mthuli Ncube and the Reserve Bank of Zimbabwe governor John Mangudya have, in the past, insisted that the interbank market which was introduced in February, would tame a thriving black market for currency as forex shortages in the southern African economy persist unabated.

But because authorities have failed to match the high demand for foreign currency, the unofficial market has continued to thrive.

Despite numerous claims that the formal market was adequately capitalised, industry has admitted that they have not been able to access any forex from that platform.

As of Wednesday, the official exchange rate stood at US$1:ZWL$5,08 while the greenback fetched as much as ZWL$8 on the parallel market.

"We are not likely to see a convergence between the parallel market and the interbank simply because your parallel market is going to be a moving target as long as you have your demand being significantly higher than your supply," a banker, who asked for anonymity, said.

Labour and Economic Development Research Institute of Zimbabwe director Godfrey Kanyenze concurred with the banker's assessment.

"If you introduce an interbank forex market when you do not have the foreign currency and you are constrained on the supply it will just go one way and this is what we have seen," Kanyenze said.

In a related matter economist John Robertson said: "the supply of foreign currency has not improved and the demand remains very much higher than the supply."