Reserve Bank scraps US$10 000 daily trading limit for bureaux de change

Reserve Bank scraps US$10 000 daily trading limit for bureaux de change
Published: 26 June 2019 (153 Views)
THE Reserve Bank of Zimbabwe (RBZ) has scrapped the US$10 000 daily trading limit for bureaux de change and the 2,5 percent maximum profit margin for banks, in a bid to make the interbank forex market more efficient and bolster Government's ongoing currency reforms.

This comes after Government on Monday outlawed the multicurrency regime and restricted transactions to local currency (Zimbabwean dollar), to curb widespread market indiscipline that has seen traders quoting prices of essential products and services in US dollars and putting them beyond the reach of many given that the majority earn local currency.

The removal of the multicurrency regime also allows the Reserve Bank to regain full monetary policy control to defend the value of the local currency, whose value has continued to plummet due to black market activities, resulting in most people preferring the stronger greenback.

As such, RBZ Governor Dr John Mangudya said yesterday that the central bank had lifted the administrative limits on the operations of bureaux de change and scrapped the profit caps on banks' interbank foreign exchange transactions.

The RBZ chief said the decision was taken to improve market efficiency in support of ongoing currency reforms following the abolishment of the multicurrency regime with effect from Monday.

Basically, a bureau de change, is a business where people can exchange one currency for another and in Zimbabwe makes part of the interbank forex market.

"What it means is that bureaux de change are no longer restricted to US$10 000 limitation on their transactions and we have removed the 2,5 percent on the margin for banks and bureau de change to ensure they operate freely to make the interbank market efficient," the RBZ chief said.

To date, the RBZ has licensed over 46 bureaux de change that are located across the country in a move that increased the number of participants in the interbank foreign currency market, other than banking institutions.

Government on Monday outlawed the use of multiple currencies through new regulations that compel all forms of transactions to be conducted in local currency (RTGS dollar), which was renamed Zimbabwean dollar on Monday.

Through Statutory Instrument 142 of 2019, known as Reserve Bank of Zimbabwe (Legal Tender) Regulations, the Government abolished the use of British pound, United States dollar, South African rand, Botswana pula and any other foreign currency, which are no longer legal tender.

Prior to the latest developments, Zimbabwe used a basket of currencies collectively referred to as the multicurrency system, which was adopted in 2009 after the country's own domestic currency had been destroyed by inflation.

Until Monday, payments in Zimbabwe could be made in any of the approved foreign currencies that included the US dollar, British pound, South African rand, Botswana pula and RTGS dollar.

The switch to a mono-currency forms part of Government's economic reforms targeted under the Transitional Stabilisation Programme (TSP), which aims to restore economic stability by putting in place key fundamentals for sustainable growth.

Part of immediate measures taken by the central bank on Monday in support of the ongoing currency reforms was the directive for banks to transfer to the apex bank local currency balances they currently hold as counterpart funds for foreign currency historical or legacy debts.

The Government, through the central bank, will assume the debts at a rate of 1 to 1 between the RTGS dollar and US dollar, which will result in ZWL$1,2 billion being taken out of circulation on the domestic market.

Further, the central bank has adjusted the overnight window accommodation rate to 50 percent per annum from 15 percent per annum in line with inflation trends and to curb speculative borrowing.

In addition, the bank said 50 percent of the export proceeds surrender requirements should be sold on the interbank market, which will be supported by US$330 million letters of credit for essential imports.

- chronicle

Tags: RBZ, Limit, Bank,
 0

You May Like These Videos

Comments

There are no comments.

Latest stories

PHOTOS: Job Sikhala becomes an instant internet joke

by Social media | 03 October 2019 | 339 Views

America says it is worried about Zimbabwe

by Mandla Ndlovu | 03 October 2019 | 365 Views

Madinda Ndlovu to be discharged tomorrow

by Staff reporter | 03 October 2019 | 246 Views

What are behavioral disorders and how can they be managed?

by Temba Munsaka | 03 October 2019 | 246 Views

Government speaks on Robert Mugabe's body parts

by Mandla Ndlovu | 03 October 2019 | 356 Views

Zacc recovers $100m property from looters

by Staff reporter | 03 October 2019 | 245 Views

WATCH: Mnangagwa apologises for destroying Zimbabwe satire

by Mandla Ndlovu | 03 October 2019 | 241 Views

Mphoko's application for release of passport dismissed

by Staff reporter | 03 October 2019 | 198 Views

Zanu-PF restructuring exercise begins

by Staff reporter | 03 October 2019 | 194 Views

Petrotrade declares $1.5 million dividend

by Staff reporter | 03 October 2019 | 155 Views

MSU, Zupco seal bus deal

by Staff reporter | 03 October 2019 | 298 Views

Mnangagwa to open ZMF conference

by Staff reporter | 03 October 2019 | 202 Views

High Court sets EcoCash hearing date

by Staff reporter | 03 October 2019 | 206 Views

Mphoko barred from leaving Zimbabwe

by ZimLive | 03 October 2019 | 204 Views

CIO agents monitor Jonathan Moyo in Kenya

by Mandla Ndlovu | 03 October 2019 | 429 Views

Acie Lumumba targets criminals around Mnangagwa

by Mandla Ndlovu | 03 October 2019 | 369 Views

$100 limit for cash-out transactions

by Staff reporter | 03 October 2019 | 274 Views

ANC starts anti-sanctions campaign

by Staff reporter | 03 October 2019 | 191 Views

ZESN calls for political parties regulation

by Staff reporter | 03 October 2019 | 164 Views

We've no forced labour evidence on Zimbabwe diamonds, says US Embassy

by Staff reporter | 03 October 2019 | 177 Views

Ex-ZPC board chairman freed on bail

by Staff reporter | 03 October 2019 | 227 Views

Cyber Bill seeks to safeguard citizens

by Staff reporter | 03 October 2019 | 147 Views

Cassava launches Vaya tractor services

by Staff reporter | 03 October 2019 | 189 Views

MDC Alliance boycott slammed

by Staff reporter | 03 October 2019 | 98 Views

10-man Bulawayo Chiefs stun Harare City

by Staff reporter | 03 October 2019 | 154 Views

Zimbabwe has a reputational problem, says US

by newzimbabwe | 03 October 2019 | 168 Views

MDC Alliance walk of shame

by Nduduzo Tshuma | 03 October 2019 | 244 Views

MDC councillors want suspension of Cowdray Park projects

by Staff reporter | 03 October 2019 | 157 Views

RBZ floats $300m additional TBs

by Staff reporter | 03 October 2019 | 145 Views

Teenagers rob soldier

by Staff reporter | 03 October 2019 | 167 Views

Duo rape corpse, get death sentence

by Staff reporter | 03 October 2019 | 184 Views

Mnangagwa to fly out for the zenith times

by Staff reporter | 03 October 2019 | 149 Views

Chamisa's MPs approach court to reverse 5 months allowance garnish

by newzimbabwe | 03 October 2019 | 81 Views

Zimra official forges Customs papers

by Staff reporter | 03 October 2019 | 69 Views

Zifa courts two nations for Warriors' friendlies

by Staff reporter | 03 October 2019 | 58 Views