Forex speculators hit hard

Source: Forex speculators hit hard | The Herald September 24, 2019

Ishemunyoro Chingwere Business Reporter
Currency speculators who, last week, disposed of their Zimbabwean dollars for the US dollar at very high exchange rates with the expectation that the local currency will plunge further, are counting their losses as measures by monetary authorities have ensured sanity in the market.

The Zimbabwe dollar to the US$ rate last week Thursday hit an all-time low as the green back fetched $25 for US$1 with speculation rife that it was poised to plunge even further.

The runaway rate had resulted in a spike in prices of goods due to traders’ US$ rate pricing model and thus eroding the impact of the recent pay increases by Government and other employers to their employees.

However, monetary authorities moved to stop the rot with market watchers pointing to the Reserve Bank of Zimbabwe’s Financial Intelligence Unit (FIU)’s decision to descend on companies suspected to be playing a role in causing the local currency’s tumble.

Illegal currency dealers who operate in Harare and spoke to this publication on condition of anonymity said they had hoped that the local currency will once again plunge yesterday as businesses reopen after the weekend and help them recoup on losses of last week.

But to their disappointment, this has not been the case as the black market exchange rate remain stuck at US$1:$15, effectively at par with the interbank rate which was US$1:$14,9 as of yesterday.

“We bought a lot of US dollars at a very high rate last week ranging from $20 to $25 for US$1 with the hope of cashing in but as it stands I think we have lost very heavily,” said an illegal dealer who declined to be named.

“I think whatever measures that RBZ instituted on Thursday are the reason why we lost.

“I personally bought US$1 000 for about $21 500 but now the best offer I am getting for the same is $15 000 and this is a huge loss for me,” he said.

Bureaux de change who offloaded Zimbabwe dollars last week are also counting their losses.

MyCash, one of the leading players in the sector was on Friday paying $20 but were yesterday trading at $14. Getbucks who were trading on $20 had lowered their rate to $15,2 yesterday.

Addressing Zanu-PF supporters in the United States of America on Saturday evening, President Mnangagwa said Government had last week outsmarted speculators who were fuelling the sharp rise in foreign exchange rates.

President Mnangagwa is in the US attending the 74th session of the United Nations General Assembly.

“On the monetary side, yes, we have introduced one currency,” said President Mnangagwa.

“For the first six weeks it remained stable, but then our people are intelligent. We have people who found ways to fight that (stability of the currency) and undermine it, but yesterday (Friday) we also became smarter
than them and so we took some action,” said the President.