Maravi

(HERALD) Forex dealers hit hard times

Forex dealers hit hard times
Herald Reporter

THE introduction of the Foreign Exchange Licensed Warehouses and Retail Shops facility authorising businesses to sell goods and services in foreign currency, and the mushrooming of other unlicensed outlets has dealt a near-death blow to the illegal foreign currency market as fewer people are changing their hard currency into Zimbabwe dollars.

Since almost all goods and services can now be paid for in hard currency, demand for Zimbabwe dollars on the illegal parallel market has fallen drastically, a development that has seen illegal foreign currency dealings almost drying up.

At the same time, the tightening-up of cash allocated to banks by the Reserve Bank of Zimbabwe has made it virtually impossible to "burn" money, that is to arbitrage between cash and cheque rates.

A survey by The Herald this week revealed a significant drop in demand for the local unit as very few shops and traders were still selling products in Zimdollars.

RBZ awarded over 1 000 shops and wholesalers countrywide licences to trade in hard currency, but other traders have since followed suit notwithstanding that they did not have central bank authority to do so.

This has seen the appetite for the Zimdollar going down as people use their free funds to pay for goods and services.

This has had an adverse effect on illegal foreign currency dealers, whose business had been thriving as people used to change their hard currency to buy goods and services in Zimbabwe dollars.

Although there is an ongoing police operation targeting illegal foreign currency dealers in and around the central business district, it is mainly the growing dollarisation of the economy that has seen the lucrative money-changing business losing its glitter.

Ximex Mall, Fourth Street, Roadport in the city, Machipisa Shopping Centre in Highfield and Tichagarika Shopping Centre in Glen View used to be hives of activity with illegal foreign currency dealers conducting brisk business.

An illegal foreign currency dealer, Ms Gertrude Mahachi, operating at the Ximex Mall, said business had been going down since the opening of the first foreign currency shops.

"Although there have been police raids here and there, it is a fact fewer and fewer people want to change their forex into Zimbabwe dollars. This has adversely affected our once lucrative business," said Ms Mahachi.

Another dealer, Mr Michael Mapuranga, said most of his colleagues were no longer reporting for "duty" owing to a sharp drop in the demand for local currency.

"The problem is that there are limited places where you can use local currency. It is possible for one to go for a month without coming across a situation requiring the use of local currency, especially in the case of motorists," said Mr Mapuranga.

Basic commodities like bread, cooking oil, sugar and maize-meal are mostly available in foreign currency.

Even commuter omnibus operators now accept foreign currency, leaving those with free funds with no choice but to hold on to their hard currency.

Mr Lawrence Chipashu of Dzivaresekwa observed there was no longer any pressing need for people to change their greenbacks, rands, pula or pounds into local currency since the economy was now virtually dollarised.

Labels: COLOUR REVOLUTIONS, FOREX, INFLATION

posted by MrK @ 5:32 PM