ZIMBABWE has set up a currency Stabilisation Task Force to monitor the country’s exchange rate, as fiscal authorities wrestle a runaway exchange rate, a cabinet minister has said.
Finance and Economic Development Minister, Professor Mthuli Ncube told a news conference on Wednesday afternoon that going forward, Zimbabwe will adopt a Managed Floating Exchange Rate System based on the Reuters portal.
This move is expected to eliminate illegal currency trading – blamed for driving the exchange rate up – and position banks and Bureaux de Change as the official currency traders.
Fiscal authorities anticipate that this will lead to the free trade of foreign exchange among banks and map the way for a true market exchange rate to be determined.
“Zimbabwe has had no transparent and effective foreign exchange trading platform for a long time. Consequently, official rates have not been effectively determined, while a thriving parallel market has developed,” the Treasury chief said.
The inter-bank rate as of Wednesday morning stood at ZWL$18.4 against the USD while the parallel market traded at ZWL$40.
The former African Development Bank Vice President cautioned illegal forex traders saying tighter criminal penalties would be introduced in the coming weeks to stamp out illegal currency trading.
“Our laws and enforcement regime are not as effective as they should be when it comes to crimes relating to foreign exchange and financial fraud. The current legal and institutional framework relating to curbing of trading on the parallel market is quite inadequate.
“Government will be reviewing all the laws and institutional framework in order to bring them in line with international best practices and more importantly, monitor the effectiveness of institutions charged with implementing the laws,” he said, adding that sanctions framework for illegal foreign exchange trading will soon be enhanced to provide for stringent criminal, civil and administrative penalties.
In light of the changes, central bank governor, Dr John Mangudya, said the apex bank was reviewing all regulations covering mobile money platforms.
“In particular, the move is expected to place limits on daily bulk payer transactions, ensure compliance with the two percent IMTT on bulk payers.
“Additionally, the daily returns being submitted by the mobile platforms to the Financial Intelligence Unit of the Reserve Bank of Zimbabwe (RBZ) will be scrutinised very carefully by the Currency Stabilisation Task Force to ensure that all transactions are legitimate and are in accordance with the financial regulations in place,” he said.