Interbank Forex Trading Goes Full Swing Tomorrow But US$5 Million Has Already Been Traded

introduced the re-instituted interbank foreign currency market, he said trading would start on the 25th of February which is tomorrow, Monday. One of the reasons could have been to make sure the legal framework is in place.

The law is now there, sort of

Yesterday the government gazetted a statutory instrument (SI) that establishes the so called RTGS dollars as a separate legal tender that can trade with other currencies freely. The government says we are still using a multi-currency system, the RTGS dollars are just one of the currencies in the basket.

It’s doubtful though that the authorities will allow the continued setting of prices in any currency other than the RTGS dollar. The monetary policy statement itself says:

The RTGS dollars shall be used by all entities (including government) and individuals in Zimbabwe for the purposes of pricing of goods and services, record debts, accounting and settlement of domestic transactions.

Not sure if the SI is legal

We will have to hear from legal experts on this but in our reading of the law the statutory instrument gazetted by the government yesterday may not be legal.

The parity between the USD and Bond Notes was established by an Act of Parliament. This poses a problem because, a statutory instrument cannot supersede an act of parliament.

Our expectation was that the legal framework for the floating of the bond note was going to be based on a pronouncement by the president under the presidential powers. However, like I said, we will need legal experts to comment.

RBZ and banks didn’t even wait for the SI

Even if the SI were sufficient, the banks did not even wait for it. The Standard quotes a senior RBZ official as having said:

The RTGS dollars shall be used by all entities (including government) and individuals in Zimbabwe for the purposes of pricing of goods and services, record debts, accounting and settlement of domestic transactions.
From the figures available, more than $5 million was traded at the opening of the interbank platform and with some big firms buying the USD$ and some selling it to banks.

So some banks traded on Friday and $5 million already changed hands. According to the above, the banks that didn’t trade did not do so because of legal reasons but because their systems were not ready.

We have a funny attitude towards the rule of law in this country.

RTGS DollarsJohn MangudyaBond Notes

Zimbabwe RTGS Dollars are a Zimbabwean currency introduced on 20 February 2019 by the Reserve Bank of Zimbabwe. At introduction, the currency consisted of existing RTGS balances in bank accounts, Bond Notes cash and Bond Coins. The introduction of the RTGS Dollars was announced by… Read More About RTGS Dollars

John Panonetsa Mangudya is an economist and the current Reserve Bank of Zimbabwe governor. Mangudya, who sits on many local and international boards .He was made RBZ governor after the expiry of Gideon Gono’s term in 2014. He had been CBZ Holdings Ltd Chief Executive… Read More About John Mangudya

Bond Notes are a currency of notes backed by a bond that the Zimbabwe government announced on 4 May 2016 by Reserve Bank of Zimbabwe (RBZ) governor John Mangudya. The $2 denomination of the notes was finally introduced on 28 November 2016. More notes were… Read More About Bond Notes