It’s been tricky in the monetary landscape of Zimbabwr over the last few weeks. We went from a steady climb of the exchange rate, to all out mayhem followed by the freezing of accounts of people believed to be responsible for the exchange rate decay. Rumour had it that accounts belonging to Sakunda energy had been unfrozen to allow for payments relating to fuel. However the Reserve Bank of Zimbabwe took to social media to refute this claim. Meanwhile the parallel market after receiving a shock that coincided with the freezing of accounts including those of Sakunda has started its resurgence as the right marginally climbed.
RBZ moves to stop decline
In a press statement from the 24th of September the RBZ moved to assure Zimbabweans that Sakunda accounts had not been unfrozen, contrary to information that was being circulated on social media. Signed by the Director General of the Financial Intelligence Unit M E Chiremba, the short communique indicated that no accounts had been unfrozen and the FIU were still carrying out their analysis.
The Reserve Bank also moved to tighten the sale of foreign currency in Bereau de Change with a press statement dated 20th September. They tightened the margins for banks on foreign currency limiting them to a margin of 7% either way of the RBZ interbank rate. They also moved to tighten allocation of cash for travel purposes.
Parallel market resurges
After the sharp rise in rates in the previous week leading up to rates as high as 21.5 on the parallel market by Friday, Monday sawthe rate fall back to levels familiar. Quotes as low as 12 were available in the market, the rate for buying US dollars hung just under 15. At that point achieving parity with the with the interbank market. However the parity was short lived as of yesterday parallel market trades were said to be happening at around 17.8.
Sure it’s only one day but analysing the trend line will tell you that this is a return to the path we were on all along rather than a shift. As the yellow line depicts, the difference between the two markets had briefly been wiped out entirely but it quickly rebounded to 20%, staying consistent with recent trend.
Clearly the parallel market is bigger than a few companies, regardless of how big their bank accounts are. One wonders why so much information has suddenly become available and so much attention has been placed on these few while the parallel market clearly shows no signs of slowing down at all. Ultimately no moves have been made to deal with the root causes of the currency depreciation. All this while prices which were raised in response to last weeks rate madness look less likely to be reviewed downwards.