Concerns that informal market may mop up US$ as parallel rates creep up

Published: 01 September 2020
Industry is yet to gather data on how much sales are being generated in foreign currency although there is an increase in the use of domestic nostro accounts to settle transactions as RTGS liquidity becomes tight. This also comes as the RBZ governor, John Mangudya, made a revision on the percentage transactions in forex to 30% from 50% earlier saying it was a moving target.
Indications from the Zimbabwe National Chamber of Commerce and Confederation of Zimbabwe Industry show that not much research has been done to determine how much of forex sales were going through amid a genuine concern from most players that most foreign currency trading was within the informal sector, which could present a problem in the future for the auction system.
While the country reported an increase in diaspora remittances in the seven months in July, most of those funds end up in informal markets as basic commodities are still priced cheaper there than formal retailers. This also comes as parallel market rates shifted upwards over the past days with street traders now buying from 102 for amounts from US$100 upwards and selling at 108-115. Most transactions are being done over three days due to restrictions on Zipit and mobile money.
CZI chief executive Sekai Kuvakira indicated that data on forex-based industry sales was not yet available and there was need for more research although ZNCC chief executive Takunda Mugaga said forex sales were much pronounced towards SMEs and the informal sector due to laxity of laws to scrutinize their trades.
CZI president, Henry Ruzvidzo said they had observed that there was an increase in the use of domestic nostro accounts to settle transactions in the absence of ZWL RTGS$. "I think the general trend that we are seeing is that there is a shortage of RTGS dollars, and we are seeing more of nostro payments," Ruzvidzo said.
Mugaga said: "I can safely say about 70% of transactions within the SMEs are in forex, 90% of transactions for the informal economy and 40% for formal big companies."
"As long as we have a dual currency, the potential of the forex auction to fully develop will be limited since few people will voluntarily flock to the auction to exchange their forex when they can transact with it domestically," he said.
Meanwhile rand street transactions are now US$ based while the premium on low value US$ notes remains with the range at 10-15%.
- finx
Tags: US,


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