The Interbank Rate Is Just Another Legal Form Of Daylight Robbery

Cash Crisis in Zimbabwe, US Dollars, Hard Currency

I have to be honest prior to the announcement of the latest Monetary Policy we all knew that the Bank needed to float the bond/RTGS and allow them at market rates, I was sure they would not do it. You see our current in general government and the RBZ in particular hate not being in control.

I was pleasantly surprised when the RBZ governor said they were floating the bond note. I was sceptical but hopeful. Several weeks later I have to say I am predictably disappointed. The RBZ has been quite guarded when it comes to releasing essential data such as trade volumes.

Of particular concern is that it would appear the RBZ has a hand in setting the so-called Intermarket rate. RBZ deputy director for financial markets William Manhimanzi is quoted as saying the following:

“We can’t just allow the exchange rate to depreciate because of people that took positions on the exchange rate. Our expectations are that banks act in a responsible manner and do not necessarily put pressure on the exchange rate”

Allowing the rate to depreciate in accordance with market forces is exactly what the RBZ said they were going to do. For them to say they are not allowing it is plain ridiculous. It means the problems that prompted this policy adoption will continue to haunt the bank and the economy. Mr Manhimanzi seems to be vaguely aware of this:

Obviously, people are still holding on because of the 2,5 exchange rate, which was perceived to have been a fixed exchange rate and for those that follow the exchange rate you will see it moving trending upwards going forward.

With all due respect if the RBZ is not allowing the exchange rate to move upwards then it’s not a market rate. A market rate is determined by the market and not by some bureaucrat. The rate is being kept artificially low by the government, the RBZ and banks in another act of legal robbery and it’s not difficult to work out why.

The Monetary Policy also mandated that several classes of exporters forfeit their foreign currency earnings at this lacklustre rate. Exporters are also mandated to make use of their proceeds within specified short periods. Failure to do so will see them relieved of their forex at the same rate.

The dirty secret

According to the deputy director:

To date over $33 million has been traded on the interbank foreign exchange market.

It seems everyone from the RBZ is spewing all sorts of figures when it comes to trade volumes. I think part of the reason why they are embarrassed to release the actual figures is simple. All these millions are coming from the said legal robbery. No one is willingly walking into a bank and handing over their USD willingly.

In fact, if you walk into your bank right now looking for forex you will most certainly not get any. In fact, no one I know has been able to get forex at these ridiculous rates. Banks and bureau de changes are quite happy to rob you of your forex at the same rates.