Interbank rate overtakes black market

Published: 03 July 2019

THE interbank exchange rate has surpassed parallel market rates with some banks offering more in local currency for those exchanging their foreign currency.

Government last week outlawed the use of multiple currencies through new regulations that compel all forms of transactions to be done in local currency.

Through Statutory Instrument (SI) 142 of 2019, known as Reserve Bank of Zimbabwe (Legal Tender) Regulations, Government abolished the use of the British pound, United States dollar, South African rand, Botswana pula and any other foreign currencies, as legal tender.

When the use of foreign currency was outlawed, the black market rate was at RTGS$13.5: US$1 while the interbank rate was at RTGS$6,3: US$1.

A survey in Bulawayo yesterday revealed that the interbank rate was on average hovering around RTGS$8, 9:US$1 surpassing the parallel market rate, which had had fallen to RTGS$7,3 for every US dollar for electronic transactions.

The black market rate was even lower for cash transactions where it was pegged at around RTGS6/6,50:US$1. Of the banks checked, CABS had the highest interbank rate buying the US dollar at RTGS$9 per US dollar, followed by NMB at RTGS$8,93 while FBC was buying at RTGS$8,56.

CBZ was buying the US dollar at RTGS$8,3 while Ecobank was buying at RTGS$7,8. Notable queues were noted at some of the banks as people realised there were better offers there.

They said considering the risks associated with the black market, the bank rate was reasonable and could probably lure people away from the informal market.

"If the rates continue like this it may limit the black market effectively. There is no reason to change foreign currency on the black market when the rates on the official market are good enough. I hope this will be a permanent situation but the banks should be fair by making foreign currency readily available to the people," said Mr Clever Nkomo.

He said in other countries, people walk into banks to change currencies without any hassles. Informal forex dealers said business was slow.

Recently, Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya said the parallel market rates will soon tumble because the current balance of RTGS dollars in circulation could not sustain the prevailing exchange rates.

The local currency was in freefall before the timely intervention of monetary and fiscal authorities who abolished the use of multi-currencies.

- chronicle

Tags: RBZ,