Zimbabwe News

Mthuli Ncube vows to intensify forex blitz

Finance, Economic Development and Investment Promotion Minister, Mthuli Ncube, has vowed there is no going back in the clampdown on illegal foreign currency dealers and businesses either rejecting the new ZiG currency or using street rates.

Ncube was speaking during the National Assembly’s question and answer session after parliamentarians raised concern about some businesses pegging prices in ZiG but against parallel market rates. He said, as quoted by The Herald):

We really mean business and want to ensure that our law enforcement agencies are equipped to enforce that (compliance with the official exchange rate).

We have instructed the FIU to look at the whole value chain (from manufacturers, wholesalers, and retailers) that they are complying with the law.

Since the launch of ZiG over a month ago, police have arrested 224 illegal money changers in a blitz that has also seen the RBZ’s Financial Intelligence Unit (FIU) freezing 90 bank accounts.

The FIU has also fined over 40 people for violating the Exchange Control Act.

Ncube also told legislators that the government was working on measures to increase the demand for ZiG and reduce demand for the US dollar.

He said the first thing was to ensure the stability of the ZiG for it to be accepted as a transacting currency. He added:

The second issue is to create super demand for the ZiG and we will soon be announcing which taxes would be paid exclusively in ZiG.

Zimbabweans have a historic mistrust of the central bank, the Reserve Bank of Zimbabwe dating back to 2008 when it printed ZWD$10 trillion notes during a period of hyperinflation.

The country then abandoned its own currency and relied on foreign banknotes like the US dollar and the South African rand.

In late 2016, Zimbabwe introduced a new currency called the bond note, purportedly backed by a US dollar loan facility, but it lost value due to excessive money printing.

On 05 April 2024, the Government introduced yet another currency, the ZiG, which authorities hope to stabilize the economy, but public reaction has been cautious.

The ZiG replaces the existing ZWL bond notes and the Zimbabwean dollar, aiming to restore confidence in the local currency.

Despite this effort, many Zimbabweans still prefer using the US dollar for transactions, which accounts for 85% of their dealings.

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