More jail time for illegal forex traders

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PROSECUTOR-General, Mr Kumbirai Hodzi, has warned of more jail time for economic saboteurs while the Reserve Bank of Zimbabwe (RBZ) says it will intensify the blitz against manipulation of the local currency against the United States dollar.

The RBZ will this week meet producers and retail outlets to deliberate on solutions to weed out the black market pricing of goods.

Also, the RBZ will introduce new measures to tighten money supply growth, as part of the strategy to clampdown on the economic sabotage that has seen the pegging of the ZWL$ at as high as 200 to US$1.

The official auction rate for US$1 is $85.

Companies, individuals and some banks have been accused of manipulating the parallel market rates, causing a spike in the price of goods and services and disruptions to the country’s economic growth prospects.

To date, authorities have moved in to restore sanity in the market with a number of arrests having been made, but more individuals, companies and bank officials are going to be nabbed.

In an interview yesterday, Mr Hodzi said they would vigorously oppose bail for economic saboteurs, who had become a security threat.

“Whoever is arrested will be remanded and bail strongly opposed so that they stay in prison. Yes, I have given an instruction and a specific directive to that effect and the blitz commenced on Friday evening,” he said.

Mr Hodzi said it was not the first time that they have conducted the blitz, but the saboteurs were unrepentant and changed tactics with each passing day.

“This time it’s going to be a sustained blitz not a short term one. What’s happening is that each day they re-group. Each day they have broken the laws and come up with new tactics. We have learnt our lesson. Each day law enforcements are done, but these criminals change characteristics of their practice.

“Government has worked frantically to stabilise the economy, but they find ways to disturb that. A number of Statutory Instruments (SI) were introduced but they have broken them. There will be no sacred cows and this is not politically motivated at all, as these people have been sabotaging the economy for a long time.”

RBZ governor Dr John Mangudya told our Bulawayo Bureau yesterday that he will meet retailers as part of a cocktail of measures to arrest the mischievous pricing of goods and services.

“The bank is, therefore, proceeding to further tighten the growth of money supply, refining the auction system to ensure that there will be no auction backlogs and dealing with outliers.

“The bank is also arranging to meet the larger producers and larger retail outlets this coming week to map out the best way to ensure that stability within the economy is restored, as almost everyone in the economy seems to be followers of the parallel exchange rates without anyone accountable. Meeting the business community is, therefore, essential for the benefit of everyone and the economy.”

He said the volatility of the parallel rates had nothing to do with economic dynamics or fundamentals, but was being caused by behavioural dynamics, especially rent-seeking behaviour of capitalising on people’s past experiences with hyperinflation and dollarisation.

“The instability of the parallel rates is not beneficial to business and consumers as it makes business difficult to run while the high implied rates erode consumers’ purchasing power of their incomes or money. The high rates have negative pass-through effects in inflation.”

Dr Mangudya said while the auction rate is determined by forex bids submitted to the central bank by entities through their bankers, the parallel exchange rates seem to be a result of competition to get forex at all costs without regard to the numerous downside risks to the economy, business and consumers.