Reserve Bank of Zimbabwe (RBZ) has come under fire over inefficiencies in the operations of the inter-bank foreign exchange market arising from alleged manipulation of the exchange rates by the Central Bank, 263Chat Business can report.
The inter-bank market was established last year to create a formal trading platform for local companies to access foreign currency on willing buyer willing seller basis as a counter measure against the burgeoning parallel market.
However, lack of transparency on activities at the inter-bank market, including alleged restraining of exchange rates by the RBZ at a time the parallel market rates are moving upwards has led to its ineffectiveness.
“I think its government manipulation of the rate. What is happening is not willing buyer willing seller as we were meant to believe. Market forces are dictating that the rate should be around 21-22 (Cash rate). Market forces are like a train, you won’t win an argument with a train and you won’t succeed by going against market forces unless government had adequate reserves to back its “managed float,” economic analyst, Pepukai Chivore noted.
Currently, the disparity between the inter-bank and parallel market exchange rates has broadened to nearly twofold.
The inter-bank rate as of this morning stood at ZWL$18.4 against the USD while the parallel market traded at ZWL$ 31.
“It’s creating fertile ground for companies and individuals to sell their foreign currency at a much favorable rate offered by the parallel market,” Chivore added.
The RBZ governor, Dr John Mangudya has on numerous occasions denied allegations of interference with the inter-bank exchange rate.
Analysts applauded the inter-bank market establishment last year with hopes that the official rate would soon realize a point of convergence with the parallel market rate provided the inter-bank would operate independent of RBZ interference.
However, the inter-bank market has since been subjected to skepticism as its exchange rates have remained somewhat stagnant despite rapid movements on the parallel market.
Last year, a total of US$1.5 billion was traded on the inter-bank in its 11 months to December; a figure analysts say is far below adequate of foreign currency needs in the economy.