Black market currency trading to be contained soon: Finance Minister

15 Apr, 2019 - 12:04 0 Views
Black market currency trading to be contained soon: Finance Minister Professor Mthuli Ncube

eBusiness Weekly

HARARE – Finance and Economic Development Minister Professor Mthuli Ncube says he expects the official exchange  rate to converge with the parallel market rate soon as the government  continues to implement prudent fiscal measures that do not fuel the  black market.

In February, the Reserve Bank of Zimbabwe (RBZ) floated the local  currency, dubbed RTGS dollar, at 2.5 to one US dollar after abandoning  the 1:1 fixed rate.

The rate has steadily gone up to slightly above three RTGS dollars per  US dollar while on the black market the rate is between 4.1 and 4.3.

Prof Ncube said government was maintaining a tight fiscal regime in  order to contain the parallel market.

“Its early days, we just introduced the new currency regime a little  over a month ago, so it (the new currency)is trying to find its way, it  is trying to find equilibrium; it will get there and close that gap  between the parallel market and the official floating market,” he told  Bloomberg TV in Washington, the United States.

“The (black market) cannot carry on, you know why, because on the  fiscal front things are very tight, because previously the fiscus was a  source of money growth and therefore (creating) weaknesses on the  currency and currency volatility.

“Currently things are very tight, we are running a surplus for the last  four months in terms of primary deficit so we do not expect the currency  to come under pressure, neither is money supply growing. On the  contrary, expect month to month inflation to go negative in the next few  months so the currency (rate) cannot run away too far.”

Prof Ncube said foreign currency supply was expected to increase as the  tobacco marketing season progressed.

“We are looking forward to an improved tobacco season, we earn about a  billion dollars from the sale of tobacco globally so we expect that to  stabilise the market over the next few months,” he said.

Last week, the RBZ issued 26 bureaux de change licenses to different  firms, with over 100 branches across the country, as part of efforts to  formalise currency trading in the country and kill the parallel market.

It is hoped the bureaux de change will channel more foreign currency  into the formal system, to be availed for use by productive sectors of  the economy.

The central bank also hopes that the bureaux de change would be the  vehicle through which the public would buy and sell foreign currency  while commercial banks cater for commercial clients. –New Ziana

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