Govt vows to close forex loopholes

Source: Govt vows to close forex loopholes | Herald (Business)

Prof Ncube

Government will continue to monitor the architecture of the country’s financial system to close all loopholes that unscrupulous dealers could use to manipulate the exchange rate, Finance and Economic Development Minister Professor Mthuli Ncube revealed on Monday

This comes in the wake of last week’s sharp devaluation of the local currency, the Zimbabwe Dollar, which authorities said had been driven by feverish speculation on the black market.

The devaluation saw the escalation of prices of most goods and services when using the local unit.

The exchange rate dropped from an average of Z$14 to the greenback within a space of a few days to Z$25 to the USD$, the lowest point the currency had devalued to since the Government re-introduced it as the country’s sole trading currency early this year.

Before that, the country used a basket of currencies, particularly the United States dollar, following the collapse of the Zimbabwe dollar in  2008.

Last week’s unprecedented devaluation of the local currency prompted the Government to freeze the bank accounts of a number of companies and individuals – suspected to be linked to the currency manipulation – an action which immediately arrested the Zimbabwe dollar’s fall.

Prof Ncube said the local currency had regained much of its lost value and had now stabilised at around Z$14/15 to the greenback, its previous level before last week’s sharp devaluation.

“It’s very clear that we needed to close those loopholes that some have taken advantage of and manipulate the exchange rate of the currency,” he said.

He said there will, henceforth, be close monitoring of developments in the market by the Government and monetary authorities, and action will be taken immediately if something suspicious is detected.

“There is stability now at Z$14/15, and we will closely monitor developments,” he said.

Currency speculators suffered huge losses after Government interventions of freezing the accounts suspected moving money to the unofficial market immediately started paying dividends.

Prof Ncube is in New York accompanying President Mnangagwa to the United Nations General Assembly, where he is also expected to hold meetings with captains of global capital to woo them to invest in  Zimbabwe. — New Ziana/HB/F.

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