Government liberalises foreign exchange market

The Chronicle

Business Reporter

TREASURY has introduced an electronic forex trading platform based on the Reuters model, which allows banks and bureaus de change operators to freely trade foreign exchange.

The move is expected to create a true market exchange rate and enhance transparency and effective foreign exchange trading on the formal channels. This comes at a time when the country is experiencing exchange rate volatility and inflation largely driven by speculative parallel market activity.

Announcing the decision at a Press conference in Harare Finance and Economic Development Minister, Professor Mthuli Ncube, said Zimbabwe has had no transparent and effective foreign exchange trading platform for a long time.

Consequently, he acknowledged that official rates have not been effectively determined, while a thriving parallel market has developed.

“To correct this anomaly, an electronic forex trading platform based on the Reuters system is being immediately put in place. This platform will allow foreign exchange to be traded freely amongst the banks and permit a true market exchange rate to be determined,” said Prof Ncube.

“The Bureaux de Change, will also participate on this platform through their authorised dealers. The trading rules of the Bureaux de Change are being liberalised so that they can conduct all wider range of transactions.”

The minister said the RBZ will continue to be a significant player in the market by providing liquidity to stabilise the exchange rate, where necessary.

“This mechanism will be immediately operational,” he said.

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