The Sunday Mail
The South African Rand has struggled to gain momentum against the United States dollar since drifting off more than a year ago, but the rate of exchange between the two most widely used foreign currencies in Zimbabwe has been surprisingly more volatile in the country, raising fears of currency manipulation.
There are no fundamentals supporting this increased volatility given that South African market prices hold broadly steady.
A survey by The Sunday Mail Business last week covering four leading banks – CBZ, Barclays, FBC and Stanbic – showed an average buying rate of R10.35 against the dollar.
This was much higher than the rate quoted by supermarkets and pharmacies, which ranged between R8 and R9.40 per dollar.
The lower rate yields higher profits for Zimbabwean retailers in dollar terms, although exporters paid in the rand may struggle if much of their procurement is dollar-denominated.
Traders on the streets paid anything between R10 and R11 for the US dollar. The street market is mostly driven by speculation.
Against the dollar, the banks sold the South African currency at between R11 and R11.1. In its home economy, the Rand has fluctuated between R10.50 and R10.69 to the dollar.
Economists raised concern over the real risk of currency manipulation by some traders due to the existing opportunities for arbitraging in the local economy.
“Generally the rand is volatile, which gives arbitreurs room to survive.
“However, the information asymmetry gives space to exchange rate manipulation, which indeed is illegal,” said Econometer Global Capital head of research Mr Takunda Mugaga.
The rand has been hurt by declining activity in the South African economy, which contracted in the first quarter, and continued strikes in the dominant mining sector.
The more than a month-long strike by 70 000 workers in the platinum industry led to a 4 percent decline in the sector during the first four months of this year.
