Thursday, May 08, 2008

RBZ liberalises foreign exchangetrade system

RBZ liberalises foreign exchangetrade system
By Kingsley Kaswende in Harare
Thursday May 08, 2008 [04:00]

ZIMBABWEAN commercial banks have started trading in foreign exchange using the black market rate, having been allowed by the central bank to do so. Reserve Bank of Zimbabwe (RBZ) governor Dr Gideon Gono last week liberalised the foreign exchange trading system to allow commercial banks set their own exchange rates, in an attempt to get people trade their foreign currency in the formal financial system.

People had been shunning the formal system because of the controlled official exchange rate of Z$30,000 per US dollar, which is currently 6,000 times less than the black market exchange rate of Z$180 million per US dollar.

The new move is aimed at availing the government with the much-needed foreign exchange for its own financing.
The interbank foreign currency trading got into full swing this week with banks offering competitive rates that ranged from $160 million to $185 million per US dollar.

Scores of people were seen in queues inside commercial banks as they sought to sell their foreign currency.

But the black market foreign exchange dealers responded by pegging the exchange rate a little higher than that of commercial banks, between Z$180 million and Z$190 million per US dollar.
Banks were offering one rate for cash or transfer with cash being paid out on a maximum of US$150.

The commercial banks’ treasury departments forum met on Thursday last week to agree on an operating framework following the announcement of the interbank trading systems by the Dr Gono.
Under the new arrangements, authorised dealers would engage the market for indicative foreign currency trading rate in the morning with each bank’s rates being posted onto terminals.

The willing-buyer-willing-seller principle would then determine the rate at which foreign currency would be traded during the course of the day.

The treasurers forum was confident that at least 90 per cent of the cash currently being traded in the streets would come to the banks.

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