This morning we observed a growing trend that started in one Ecocash Agents group on WhatsApp, cash premium has fallen significantly following news that the RBZ was going to introduce $1 billion in currency at 1:1 with the bond notes.
One cash seller had a word of caution for others:
[We are about to have a new cash injection guys, you will sink if you are not careful. No one will buy your cash once the new currency comes out. There is a risk that you spent 45% today and the following morning the bond and RTGS will be 1:1.]A translated message send by one dealer to others in a WhatsApp group for Ecocash agents
It seems his colleagues have taken heed. Soon after we started seeing advertisements where bond notes were being sold for a paltry 25% Ecocash, yesterday those who were selling notes for 35% had been laughed off for being easily scared by the RBZ and leaving money on the table. Now it seems they were the wisest of the bunch.
We also went out in the morning to some people who open early to sell cash to commuters and it was the same story. None of them had notes, it was all coins but they were asking for 22% instead of the usual 27-30%.
This is how you deal with cash sellers
This is how you deal with cash sellers, increase supply so their speculative behaviour is for nought as there will be enough supply despite their hoarding efforts. You don’t do it by banning cash in and cash out. That failed this succeeded.
Just in case anyone is listening, the right way to solve the exchange rate issue is to boost local production especially agriculture, invest in irrigation, introduce beneficiation and value enhancement, eradicate corruption in the mining sector and aid local industries. There will be less thirst for foreign currency if we have ample local goods.