By Chris Muronzi
A fierce government crackdown on illegal forex dealers, increased electronic surveillance of bank accounts, deployment of state security agents and arrests of individuals suspected to be at the centre of the booming parallel foreign exchange market this week saw the rates come down.
When volatility is clamped down, then volumes decline and the rates go down.
The US dollar/Real-Time Gross Settlement (RTGS) rate, which peaked to around 600% or a rate of US$1:6 two weeks ago, was trading at around 280% by end of day yesterday, from around 400% early this week.
The market has different rates for the US dollar, which include RTGS, bond note, mobile money and the Old Mutual Implied Rate.
The latest market developments come as central bank chief John Mangudya this week swiftly moved to suspend high-ranking divisional heads at the apex bank after allegations of financial impropriety were levelled against them by activist William “Acie Lumumba” Mutumanje — hired by the Ministry of Finance as communication taskforce chairperson for a few days — and ordered increased monitoring of transactions in local banks to drive the rates lower.
Internal investigations are going on. However, claims that their personal bank accounts had hundreds of thousands of dollars or millions proved untrue. Bank documents seen by businessdigest show their accounts since January had flactuating amounts ranging between US$4 500 and US$20 000, although they could have been using other undetected channels.
The clampdown and increased monitoring of bank accounts with high transaction volumes and the use of state security agents to rein in the forex black market rate sent shockwaves through the market with many traders avoiding use of Zipit, a real-time payment platform, to pay for trades.
Institutions and individuals with fat RTGS balances had been buying US dollars amid heightened fears the local currency would lose value against major currencies.
The anxiety became more pronounced after Finance minister Mthuli Ncube’s announcement at the beginning of this month that corporates and individuals should open separate accounts.
The announcement was construed to mean government no longer recognised bond notes and RTGS balances as equal to the US dollars, and triggered currency volatility and a wave of price increases after the value of RTGS and bond notes crashed against the greenback.
Already, Ncube — who keeps shifting on the issue — has tried to calm the markets and inspire confidence by announcing the local currency still has the same value as the US dollar. He also added that Afreximbank had agreed to some guarantees to support the value of the US dollar.
His assurances also helped stabilise the rate.
However, analysts say government’s campaign to eliminate possible sources of supply amid high demand by intensive policing and controls is futile as it addresses symptoms of the problem not its root causes.