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Reserve Bank of Zimbabwe has black market traders in its crosshairs

Zimbabwe has outlawed all foreign currencies, including the rand and the US dollar.
Zimbabwe has outlawed all foreign currencies, including the rand and the US dollar.

The Reserve Bank of Zimbabwe (RBZ) has set its sights on parallel-currency market traders, in a move it hopes will stabilise exchange rates in the economy.

The central bank named 30 individuals who are allegedly abusing mobile telecommunication services and fuelling parallel-market activities.

Reserve Bank governor John Mangudya issued a statement saying the Financial Intelligence Unit (FIU) has identified individuals who are abusing the services, as well as social media platforms, “to promote and facilitate illegal foreign exchange transactions and money laundering activities”.

“The FIU has instructed banks, mobile money operators and other financial service providers to identify and freeze any accounts operated by these individuals and, further, to bar them from accessing financial services for two years, with immediate effect. The FIU has also requested the Postal and Telecommunications Regulatory Authority of Zimbabwe to bar the said individuals from operating mobile phone lines,” Mangudya said.

The official Zimbabwe dollar has weakened in the past few months, while the local currency instability has seen rates on the black market double. The official exchange rate, of the Zimbabwe dollar on the central bank's weekly auction, is 1:86 to the US dollar. But on the black market, one US dollar sells for ZW$168.

The surge in parallel market rates often leads price hikes of basic commodities in the country. Recently, Zimbabwe’s vice-president Constantino Chiwenga threatened parallel-currency market traders.

“The drawback, which we continue to face, is indiscipline on the parallel market, which continues to stir up negative expectations that undermine the impressive efforts by the monetary authorities. I want to warn the perpetrators of this heinous crime that the long arm of the law will soon catch up with them,” Chiwenga told business leaders in the second-largest city of Bulawayo.