Africa Moyo Deputy News Editor
The surge in black market foreign exchange rates recorded in the past few days from US$1:$22 to US$1:$25 has been traced to a Chinese firm which shipped millions to the black market.
The Reserve Bank of Zimbabwe (RBZ)yesterday froze the bank account of China Nanchang pending further analysis.
RBZ said it was undertaking surveillance to identify more culprits involved in the parallel market transactions.
The parallel exchange rate had been steady, failing to breach the US$1:22 mark for the last four months, but all of a sudden there was a jump in the last two days.
The rate has remained at US$1:$17 on the interbank market.
In a statement yesterday, RBZ Governor Dr John Mangudya said: “Earlier today (yesterday), the Reserve Bank of Zimbabwe issued a statement raising its concern on the illegal activities of foreign exchange rate manipulators who have been engaging in activities that have exerted pressure on the exchange rate in the last few days.
“The bank escalated the matter to the Financial Intelligence Unit (FIU) for investigation and the FIU has so far identified one entity (China Nanchang), which has used its bank account to inject millions of dollars into the parallel market in the last few days.
“The FIU has ordered the freezing of the identified account pending further analysis and is undertaking ongoing surveillance to identify more culprits involved in the parallel market transactions, particularly on the EcoCash platform.”
Dr Mangudya said RBZ remained focused on its mandate to ensure market stability.
“To this end, the bank will work closely with the FIU to identify and take appropriate action in terms of the law, against any culprits involved in illicit foreign currency activities and manipulation of the foreign exchange rates,” he said.
Economist and Monetary Policy Committee (MPC) member Mr Eddie Cross told The Herald yesterday that China Nanchang could have offloaded funds it obtained from Government as payment for dam construction.
“I understand that the Government paid the contractor on the Gwayi/Shangani Dam and they have gone into the parallel market to buy US dollars,” he said.
“The Ministry of Finance needs to manage peaks in State spending.”
In September last year, the RBZ froze bank accounts held by 10 companies on suspicion they were engaging in money-laundering activities and fuelling the foreign currency parallel market.
The bank accounts were unfrozen after the FIU allegedly failed to get evidence linking the firms to illegal foreign currency dealings that saw the local unit crashing, triggering price hikes.
Mr Cross urged the RBZ to be “much tougher” when dealing with alleged currency manipulators to foster currency stability.
Economist Mr Persistence Gwanyanya said the local currency was concentrated in the hands of a few, a situation that was driving currency instability.
“In the recent past, RBZ’s Financial Intelligence Unit froze a couple of accounts suspected to be destabilising the market and we saw some stability being experienced in the market,” he said.
“Currency stability experienced in the last four months is partly attributable to this intervention.
“However, worryingly, the major issue regarding the source of this liquidity, which ends up in the hands of the few, has remained unaddressed.
“This exposes Treasury, as well as ministries and other Government entities that depend on its support in respect of liquidity. Injudicious management of cash flow or liquidity by these entities continues to be one of the major drivers of currency instability.”
Mr Gwanyanya urged Treasury to address the injection of huge sums of money to a few beneficiaries by either itself or other Government and related entities to curtail diversion to the parallel market.