Zimbabwe’s currency has taken relentless buffeting from surreptitious activities of only a few cash barons who are carelessly manipulating exchange rates on the foreign currency market with impunity, which authorities are now aware of and will soon decisively deal with, highly placed Government sources revealed this week.
President Mnangagwa’s recent successive warnings aimed at currency manipulators, points to the firm decision the highest office has since taken, demanding strong decisive action against the
perpetrators to put an end to these toxic shenanigans.
The honeymoon, top Government sources said after the President’s remarks this week, was drawing to an unhappy ending for the overly powerful cash barons fanning exchange rate volatility through illegal currency trading on the parallel market.
Business Weekly has it on good authority that President Mnangagwa was now aware of the activities of only a few cash-rich powerful individuals who are hurting the domestic currency and has demanded action against and an immediate end to it.
There is reportedly serious concern in Government over the effects of the currency volatility, which has undermined Zimbabwe’s economic stability and trust in the governing system.
This comes after last week, the Financial Intelligence Unit recommended that the RBZ froze the accounts of fuel, transport and logistics group Sakunda Holdings, financial services firm Access Finance, Spartan Security and vehicles sales company Croco Motors to allow investigations for any misconduct.
Currency and economic volatility have caused crisis of confidence, 40 percent of which the sources said resides in economic fundamentals and the balance in the political system.
It is against this background that the Reserve Bank of Zimbabwe last week froze the accounts of some top businessmen over a week ago to pave way for further investigations.
Official sources said the President was evidently alive to the fact that if he did not act fast, the currency manipulation would continue undermining the ongoing reform efforts to stabilise the local currency and economy, which is showing strong positive signs.
“Those are important issues he highlighted during his SONA address, the call for unity of purpose . . . warning to currency manipulators . . . where the inflation is coming from.
“The President has seen it (currency manipulation) himself, that is why he is saying stop it henceforth.
“And that is why you also saw that bank accounts of some top companies have been frozen for further investigation; this issue is a serious one.”
President Mnangagwa first hinted that he was now acutely aware how smart but unscrupulous powerful businessmen were hurting the Zimbabwean dollar through illegal currency trading when he addressed Zimbabweans in the United States where he had travelled for the 74th United Nations General Assembly held in New York City.
He said after the introduction of the mono domestic currency in June this year, the exchange rate stabilised for five to six weeks, before running loose once again.
“We have now arrested the galloping rate which was galloping from about eight, within few days it had gone up 10, and 20, by the time we left it had gone down and I think today it is about 14,” President Mnangagwa said while in New York last week.
And only on Tuesday this week, he once again, warned the currency manipulators, whom he labeled economic saboteurs when delivering his State of the Nation Address (SONA) and officially opening the Second Session of the Ninth Parliament of Zimbabwe.
Zimbabwe’s Head of State and Government gave an ominously chilling warning to the domestic currency manipulators, the second he has warned inside just a week.
He said his administration’s fight against corruption will be unrelenting warning that acts of economic sabotage through manipulation of currency would not be tolerated.
The President said the Government was encouraged by the nation’s response to currency reforms and the stability of the Zimbabwe dollar over the past eight weeks.
“However, last week’s events of exchange rate manipulation amounts to economic sabotage and should not be tolerated. We all need to adhere to the rule of law and foster discipline at all levels,” he said.
This comes as the value of the Zimbabwean dollar has significantly depreciated against major currencies, especially the US dollar, since the exchange rate was floated in February this year, amid a dollar crunch and an interbank forex market established.
The local currency started trading on the formal foreign exchange market at an exchange rate of USD1 to ZWL2,5, but gradually lost ground until it reached current levels of 14 or 15.
In fact, the exchange rate at one point reached levels of 1 to 21 on the parallel market before plunging to around 1 to 8,5 after Government scrapped multi currency in June.
In the intervening period, the exchange rate volatility has left a blazing trail of inflationary pressures, which have pushed inflation from 5,39 percent in September 2018 to a staggering 175,5 percent at the last official county in June this year.
The price instability has resulted in untold suffering for the majority of low income earners in the country who are already grappling high unemployment, acute fuel and power shortage and food insecurity after the drought and the devastating effects of Cyclone Idai disaster.
But sources within Government circles said this week that the sharp remarks by the President while in New York, which he reiterated extensively during his SONA and Ninth Parliament opening address should be read as evidence of the extent to which he was aware of the real culprits behind currency manipulation as well as action he will institute.
“The one interesting thing about these currency manipulators is that they have Zimbabwe dollars which most of the people do not have, which is why they are able to buy the money at those exchange rates, most people can’t afford those rates.
“So the President’s remarks are targeted at these people (cash-rich barons) because you and I cannot have that kind of money to drive exchange rates on the foreign exchange market to levels of 1 to 21 which they reached before the accounts were frozen.
“The big question is that given the economic situation in Zimbabwe and when most people do not have money where do these people get the money they use to buy the foreign currency the way they are doing to drive the exchange rates that way. These are the people the President was referring to,” another top source said.