RBZ warns banks against pairing clients for forex

THE Reserve Bank of Zimbabwe (RBZ) has directed banks to furnish it with the pipeline of foreign currency demand from clients for the period to June 2024, and also ordered the institutions to desist from the previous practice of match-making buyers and sellers of forex by serving clients on a first come first served basis.

Analysts said the directives were meant to deal with potentially distortionary parallel market conduct by authorised dealers following the introduction of new currency measures by authorities.

This comes after RBZ governor Dr John Mushayavanhu last week introduced a new currency, Zimbabwe Gold (ZiG), as part of several policy measures to tame Zimbabwe’s volatile exchange rate, which has driven rapid increase in inflation.

Zimbabwe ditched its domestic currency for the second time in just over a decade after it lost over 80 percent of its year-opening value, amid sustained depreciation.

Delivering his maiden monetary policy statement in Harare on Friday, the new central bank chief also announced the bank would pursue a market-determined exchange rate system on the willing buyer-willing seller interbank market.

Amid challenges presented by limited foreign currency, volatile exchange rate and parallel market activities last year, following the introduction of the willing buyer-willing seller (WBWS) interbank market, the apex bank once warned banking institutions to desist from matchmaking forex clients.

In a foreign exchange directive issued this week, the bank said to establish immediate foreign exchange requirements from authorised dealers’ clients already submitted as of April 08, 2024, banks were directed to provide details of the currency pipeline demand to June 2024.

“This information should be submitted to exchange control…by 1600hrs, Tuesday 09 April 2024,” the bank’s acting foreign exchange control director Tafadzwa Muvevi said.-ebusinessweekly