eBusiness Weekly
Business Writer
As Zimbabwe continues to battle acute foreign currency shortages, some manufacturers have turned to the parallel market to access foreign currency to purchase raw materials and spare parts.
This has inevitably caused price increases for some products.
Reserve Bank of Zimbabwe (RBZ) Deputy Governor Dr Kupukile Mlambo recently conceded that some firms that applied for foreign currency to make foreign payments are yet to get any allocations in a year.
Interestingly, Dr Mlambo said, the companies have continued to operate “and we know where they are getting their forex from, but I just can’t say”.
From September to mid-November last year, exchange rates soared to 90 percent for every US$100 if one wanted the money to be transferred into their account. If one wanted to get bond notes for their US$100, the rate soared to 45 percent in the same period.
However, following Operation Restore Legacy which started on November 15, the rates have been coming down.
At the moment, rates for transfers are pegged at anything between 35 and 45 percent while the bond notes rate is about 25 percent.
This has prompted questions on who determines the parallel market rates.
Several black market currency dealers were not keen to talk about the issue, suspecting they were being interrogated by the police.
However, the bulk of those who opened up said the forces of supply and demand are central to how the rates are determined.
If there are many people — including corporates — wanting to buy US dollars, and if they are scarce at that point, the rate goes up, and vice versa. Other dealers also said the availability of bond notes on the market plays a key role in determining the exchange rates.
“If bond notes are easily obtainable from the banks, then the rate goes up but they are in short supply, then the rate comes down.
“At the moment, we are experiencing a shortage of bond notes this is why we are selling R100 for $10 (bond). But once we start getting more bond notes, we raise the rate to $11,” said a dealer on condition of anonymity.
Economic analyst Persistence Gwanyanya also indicated that the forces of “demand and supply” are responsible for determining rates.
Gwanyanya added that the major influence on the rate for foreign currency on parallel market are the corporates, which have the financial muscle to demand large sums of money.
“Obviously, demand from corporates is a function of the supply of foreign currency from the formal system.
“When RBZ allocations are low, we are likely to see an increase in demand for foreign currency on the black market from corporates, and vice versa.”
With the tobacco selling season opening next week, and the contribution from gold exports kicking in, demand for foreign currency is expected to subside up to November, and with it the black market rates.
But given that many payments have not been paid for long, resources from tobacco will only be a drop in the ocean, implying that rates will parallel market exchange rates only stabilise in the short-term.
