NEW: Retailers lament ‘multiple exchange rates’

Online Reporter

The Confederation of Zimbabwe Retailers (CZR) has called for a speedy resolution to the problem of multiple exchange rates, adding that some manufacturers and suppliers are resorting to turning down payments in local currency.

In June 2019, Government reintroduced the Zimbabwe dollar as the sole legal tender, but then allowed United States (US) dollar transactions last March, to limit the impact of the Covid-19 pandemic.

However, currency speculation has resulted in the emergence of multiple, albeit illegal, exchange rates.

The official (auction) exchange rate is $88,5 to the US dollar.

“It has come to our attention that there are four exchange rates one meets at goods and service procurement.

“There is the auction exchange rate ($89: US1), Zimbabwe dollar (ZWL) Swipe to US$ ($180 to US$1), ZWL mobile money to US$ ($200: US$1), and ZWL cash to US$ ($165: US$1). We have also discovered that there is also a rate for nostro USD,” said CZR president Mr Denford Mutashu.

“This has created confusion on the market and extreme cases are when the supplier /manufacturer/tuck shop wholesale flatly refuses any other payment for goods and services except US dollar cash which comes with sweet discounts to entice the retailer or wholesaler.”

Mr Mutashu said the multiple exchange rates were causing confusion in the market, as formal retailers were struggling to compete with informal businesses that sell exclusively in US dollars.

He also said this was pushing more companies to demand US dollar payments, and to seek for hard currency on the parallel market.

“The huge demand for foreign currency has meant, players not accessing forex from the auction use internal sales and source the remainder from the parallel market,” he said.

Retailers want Government and business to meet and urgently resolve the exchange rate dilemmas.

CZR has urged Government to set up an inter-ministerial committee to “interrogate the foreign currency exchange rate challenges, abuses, manipulation and arbitrage and map the way towards stability as the parallel market exchange rate poses a great risk of declining company projections and bottom lines.”

On Thursday, the Reserve Bank of Zimbabwe (RBZ) said its Financial Intelligence Unit (FIU) is “investigating allegations of currency manipulation and pegging of the Zimbabwe dollar at 200 to US$1 circulating on social media. Perpetrators shall be brought to book.”

On the same day, Finance and Economic Development Minister Professor Mthuli Ncube said the Zimbabwe Revenue Authority (Zimra) will now carry out unannounced audits to weed out illegal foreign currency trading activities by corporates.