The ongoing crackdown on suspected foreign currency traders by President Emmerson Mnangagwa’s government is being done to prevent further foreign exchange market chaos, an economic contagion and political unrest that may lead to a popular uprising.
Security sources last week told The NewsHawks that the authorities want more dealers arraigned, with “some traders and senior corporate executives” set to “spend Christmas in jail”.
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The clampdown is reportedly a coordinated and systematic campaign involving the Central Intelligence Organisation (CIO) and security agencies, the Reserve Bank of Zimbabwe, especially its Financial Intelligence Unit (FIU) and the Ministry of Finance.
Security sources say the crackdown is a culmination of a series of meetings and investigations by the authorities and security teams into what has been happening in the foreign exchange market and the economy of late.
According to The NewsHawks, this involved a security threat analysis of the situation on the ground by the CIO and other key intelligence services that concluded that the exchange rate issue poses a clear and present danger to Mnangagwa and his government. A source reportedly said:
This is a coordinated government operation that involves the ministry of Finance, RBZ and CIO to contain the recent currency crisis.
It will be running for some weeks and may further be extended for some months. Government wants to crush the illegal traders driving the rate spiralling out of control.
Authorities fear that an uncontrolled exchange rate crash might have serious contagion, by spreading into an economic crisis from the currency collapse.
Authorities say illegal forex trading is sabotaging the economy and will trigger inflation while weakening the local currency. Zimbabwean authorities are scared of a repeat of the 2008 situation.
Analysts say given the weak economic fundamentals and increased money supply, mainly through infrastructure projects, this currency crisis was predictable and may scale 2008 heights unless quickly contained.