Bureaux de change align rate to interbank

Published: 24 September 2019

Government, through the Reserve Bank of Zimbabwe (RBZ), has moved to refine the operations of bureaux de changes to align their foreign currency exchange rate with that of the official interbank market.

According to the RBZ, one of the key pronouncements made are that bureaux de changes trades be at a margin of around 7 percent of the interbank mid-rate as opposed to the current highly liberalised rate. As at the end of business yesterday, the interbank mid-rate stood at 14,9.

The move by the RBZ is expected to bring stability in the foreign currency trade, contrary to the illegal parallel market where the rate skyrockets willy-nilly.

"The current interbank foreign exchange market is currently governed by the willing seller — willing buyer concept, without making reference to the interbank foreign exchange rate.

"In order to bring sanity on the operations of the Bureaux de Change . . . all the interbank trades shall be processed at a margin of plus or minus 7 percent of the interbank mid-rate," said the RBZ.

For those travelling outside the country and in need of foreign currency, bureau de changes shall sell foreign currency cash upon submission of a passport.

Current cash limits for personal travel allowance of US$300 per day, per travel, and up to a maximum of US$10 000 per year shall be applicable, according to the RBZ regulations.

The apex bank has pegged business travel allowance of US$400 per day, and up to a maximum of seven days per travel. These, the central bank has indicated, will be monitored to avoid abuse of the facilities.

Said RBZ: "The bureaux de change are, henceforth, required to endorse passports of travellers who would have purchased foreign currency (and) shall be required to strictly adhere to the daily reporting requirements to the Central Bank; and the bureaux de change are required to visibly display the interbank exchange rate on their FX rate boards."

In order to enforce the regulations, the Financial Intelligence Unit (FIU) and Exchange Control Division of the RBZ shall mobilise resources to enforce compliance by all foreign exchange market players and non-compliance will result in financial penalties or withdrawal of operating licence.

This year Government implemented currency reforms aimed at restoring confidence. These include introduction of local currency, removal of the multi-currency system for local transactions as well as floating the exchange rate.

In terms of the latter, the interbank market was introduced this February to normalise foreign currency trading and curb the inflationary parallel market, and the gap between the interbank and the parallel market rate is anticipated to narrow down in view of the latest measures.
- the herald

Tags: RBZ,