Late yesterday, the Reserve Bank of Zimbabwe (RBZ) made good on their threat and announced that they had frozen the accounts of one company they accused of fueling the recent spike in black market rates. The central bank has given indications that more accounts can be frozen.
China Nanchang, according to the Herald was dumping millions of local electronic dollars into the black market. Apparently the company received payment in exchange for constructing Gwayi/Shangani Dam.
Upon receipt of payments the contractor decided to go on a splurge hunting for coveted USD on the black market and pouring millions into it. The authorities contend this is what resulted in a spike in the rate from $22 ZWL per 1 USD early last week to over $25.5 yesterday.
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.Eddie Cross speaking to the Herald
Questions, questions and more questions
This latest incident is intriguing to say the list but it does lead to several questions and conclusions:
- Why is a foreign company being paid in local electronic funds? No doubt the company has to repatriate some of its proceeds
- What does this say about the government’s much touted currency swap program. Nobody believed for a second it would work. What kind of dumb company would willingly give up it’s foreign currency just so it can get the local currency?
- It’s not like there were Chinese lining up asking the government where they could get RTGS dollars which are in plentiful supply
- Does it seem odd that it’s government affiliated entities that seem to be fueling the black market
- Why is it none of those with frozen accounts are ever found guilty. Instead we can all expect these accounts to be unfrozen soon. Beijing is one of Harare’s very friends they would never do a Chinese company like that. Doing this would be suicide.
- When is the government going to free up the intermarket rate?