Govt lifts restrictions on exchange rates, dropping penalties for higher charges
HARARE – Government took a significant regulatory step by issuing the Exchange Control (Amendment of Schedule to the Exchange Control Act) (Repeal) Notice, 2025, which repealed Statutory Instrument 81A of 2024.
Initially implemented as part of efforts to regulate the exchange rate landscape in Zimbabwe, Statutory Instrument 81A of 2024 established specific civil penalties for sellers offering goods and services at rates above the prevailing average interbank foreign currency selling rate. Notably, the instrument outlined hefty penalties, including a fixed penalty amounting to 200,000 Zimbabwean Dollars (ZiG) or the equivalent of the foreign currency value of the goods or services in question. Additionally, it allowed for cumulative daily penalties for unaddressed infractions and provided a mechanism for alleged defaulters to contest violations.
Reserve Bank of Zimbabwe governor recently said that the market was free to price their goods and services they prefer without being limited to using the official exchange rate with the freedom being extended to the WBWS market. “Greedy market players might end up pricing themselves out of business as the ZWG to USD rate had stabilised at a particular level,” said Mushayavanhu.
With the repeal of stringent penalties through SI34 of 2025, businesses may enjoy greater flexibility in setting prices and adapting to market conditions. This could enhance competitiveness, potentially lowering prices for consumers.
One of the challenges of having multiple currencies is the complexity that arises from managing different exchange rates and the associated risks. By repealing regulations that impose penalties on sellers concerning exchange rates, the government may be attempting to simplify the economic landscape, potentially paving the way for a more unified currency system.
There has been a long-standing concern regarding the value and stability of the local currency compared to foreign currencies. If the government is moving towards a mono-currency system, it would need to actively work on restoring public trust in the national currency, which could be facilitated by deregulating certain aspects of exchange control to allow market forces to play a larger role.
-finx
