Banks Directed To Embrace Black Market Exchange Rates

The Reserve Bank of Zimbabwe (RBZ) has directed banks to embrace the parallel market foreign exchange rates as it also re-aligned the rate at which local fuel distribution companies should source forex.

John Mangudya, RBZ governor said that the measures should apply from Tuesday this week. Mangudya said:

The bank has directed banks to effectively apply the willing-seller willing-buyer principle to ensure that the interbank foreign exchange market is reflective of market conditions. Accordingly, banks must ensure that there are no moral hazards in the operation of the interbank foreign exchange market.

In this regard, all the foreign exchange requirements for banks for their own use include dividend payments, subscription fees, etc, would need prior Exchange Control approval for the proper conduct of the interbank foreign exchange market. Similarly, banks should discontinue twinning arrangements for their customers as this undermines the efficient operation of the interbank foreign exchange market.

This means that banks can now trade forex at parallel market rates. Fears abound, however, over the possibility of banks monopolising forex for their own use alone.

More: The Independent

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