After weeks of us and a lot of people begging for the monetary authorities to do something about the spiralling foreign currency market with no answer, yesterday the RBZ finally acted.
To prove the conspiracy theories right, the nature of the intervention itself was somewhat surprising and unexpected, to say the least. It was not in the form of some pithy policy change. Rather it came in the form of a memo to banks instructing them to shut down accounts of certain individuals.
The snap of a finger that stunned the market
Just like that the markets were pared. The memo, which was suspiciously leaked to the ZBC, seemed to have the intended amplified effect. Other big buyers tucked tails between their legs and fled for the hills leaving the little buyers stunned and reeling with shock as the rate tumbled.
Today no one seems to even know what the actual indicative black market rates are. People are just posting various wildly different rates that just shows the confusion the intervention by the central bank has caused in the black market.
Expert the markets to recover
Our analysis is that this retreat is temporary as it does not solve the reason why the markets are surging. The instrument used here does not reduce the thirst our economy has for the USD which is in short supply.
The itch is still there and all the RBZ has done is stop people from scratching it. Eventually, the scratching will begin as the need is still there. To be fair the RBZ needs the Ministry of Finance and other ministries to chirp in and boost local production and thus remove the need for foreign currency.
As things stand expect the markets to gather themselves before they begin their northward march. It could take hours, days or even weeks but march on they will. They have to because the alternative is unthinkable. If they take too long to recover it means the death of our local economy.