Currency traders feel the heat

26 Nov, 2017 - 00:11 0 Views

The Sunday Mail

Illegal currency dealers have begun to adjust downwards the premiums they charge for hard currencies, primarily the US dollar, against bond notes and plastic money as market forces react positively to political changes in Zimbabwe.

President Emmerson Mnangagwa was on Friday inaugurated as the country’s second Executive President, taking over from Cde Mugabe who tendered his resignation last Tuesday.

Zimbabwe’s new Head of State ad Government is expected to steer an economic policy shift buttressed by greater investment opportunities.

Premiums for hard currency sky rocketed on September 23 when US$1 cost $1,60 in bond and $1,80 in plastic money.

Government responded by unveiling a US$600 million Nostro Stabilisation Facility from African Export-Import Bank, which saw the bond note firming before it returned to a downward spiral. But events of the past week, traders said, had seen demand for the greenback on the unofficial market nose-diving.

“I can’t really tell why we are experiencing this but the brisk returns we were registering are no longer obtaining,” said an illegal trader who operates at Eastgate Shopping Mall in Harare.

“A few days ago we were selling US$1 for $1,45 of bond but today (Friday) we have lowered the rate to $1,30 . . .  but still we are not selling anything significant as people are not buying at these rates.”

Plastic money was trading at $1,80 for every US$1 and this too has fallen.

“Our premiums have taken a knock from $1,80 to $1,45 as at yesterday (Thursday) evening,” said another illegal currency trader.

Reserve Bank of Zimbabwe Governor Dr John Mangudya previously said the premiums would tumble as they were all speculative.

“Our advice is the market should not always be confused by social media as some unscrupulous dealers are bent on cashing on the unsuspecting public,” said Dr Mangudya in September.

“We urge the market and the nation to be patient as the economy recovers on the back of rising exports and the nostro stabilisation facility, which we have begun to draw down therefore we expect the premium (being charged by illegal dealers) not to hold and continue to decrease.”

The high premiums that were being charged by parallel market dealers had a negative impact on commodity prices at a time employers could not increase salaries, thus wiping out people’s buying power.

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