Forex blackmarket: More arrests loom

More people illegally dealing in foreign currency will soon be arrested and more financial institutions charged as Government cracks the whip against those driving and manipulating the black market despite the fact that Zimbabwe's foreign currency inflows are more than adequate to buy all required imports and services.

Legislators and economic analysts attending a pre-budget seminar to mark the beginning of the 2022 National Budget cycle, urged Government to take decisive action against corporates pricing commodities at black-market rates despite accessing foreign currency from the Reserve Bank of Zimbabwe's auction system.

The local currency was yesterday being sold by dealers for as much $200 to US$1, more than double the official rate set by the auctions of US$1:$88,6.

In his remarks, Speaker of the National Assembly Advocate Jacob Mudenda said the black-market would derail the attainment of Government targets captured in the National Development Strategy 1 (NDS1), .

"Of concern is the black-market premium, which is now twice the official exchange rate of US$1: $88,6.

"The black market premiums are a major driver of inflationary developments in the country. This trend will derail the NDS1 objective of stabilising the foreign exchange rate and maintaining a low inflation of within the SADC macroeconomic convergence benchmark of 3 to 7 percent," he said.

He thanked the Government for spearheading the fight against illegal foreign currency dealers.

"Recently, there have been some 47 arrests of people involved and more will be arrested and I believe, including some banks. This will assist us to bring inflation down because as long as we don't bring the black market down, inflation will continue to rise," said Adv Mudenda.

Executive director of the Africa Development Strategies, Professor Gift Mugano, said Zimbabwe was generating enough foreign currency that would assist in improving the economic fortunes if harnessed through the formal channels.

Last year, the country saw inflows of over US$6,2 billion and is on course to rake in US$8 billion this year.

Prof Mugano called on Parliament to exercise its oversight on the use of the foreign currency coming in through exports and other official inflows.

We are in the top five of receiving foreign currency in Africa, so where is it going? What is happening is that people are trading money. It has become a commodity because of the gap between the official rate and the parallel market rate," he said.

Prof Mugano bemoaned the increase in the number of people using their skills and expertise to circumvent systems.

"If Government doesn't deal decisively with this corruption and trading in foreign currency, we will make history as a country of having a collapsing economy when we have all the positive indicators," he said.

Ms Shanangurai Takaindisa, the deputy chairperson of the Bankers Association of Zimbabwe, urged Government to retain some of its gold and other minerals in reserve to shore up the local currency.

Buhera West legislator, Joseph Chinotimba, called for the arrest of big companies that are getting foreign currency from the auction system but go on to peg prices based on the parallel market rates.