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Zimbabwe considering bank fines, suspensions over currency gouging

Zimbabwe is considering penalising domestic banks, telecommunications operators and other businesses over what the government describes as profiteering off the hard currency it makes available at auctions.

Lenders could face fines and suspensions, while companies that charge a premium for foreign exchange may be banned from participating in the auctions, central bank Governor John Mangudya said in a phone interview from the capital, Harare.

“All the malpractices will be targeted,” he said. “There’s no need to chase foreign currency as if it will run out.”

President Emmerson Mnangagwa on Monday threatened unspecified actions against “sharks in the financial sector,” according to the state-owned Herald newspaper, which said unidentified entities are profiteering at the public’s expense. The president’s comments were made during a wide-ranging interview he gave to state-owned television that will be aired on April 17 on the eve of Independence Day celebrations, the paper said.

Exchange Closed
Mnangagwa has previously issued warnings to private companies he blames for undermining his efforts to turn around an economy plagued by annual inflation of 241% and foreign-currency shortages.

Also read: Air Zimbabwe creditors to be paid through 1 to 1 Zimbabwe/US dollar ratio

Last year, his government closed the Zimbabwe Stock Exchange for five weeks and singled out the largest mobile operator, Econet Wireless Zimbabwe Ltd., for undermining the nation’s currency through its mobile-money service. Econet denied the allegations.

The impending action is an attempt to prevent manipulation of the foreign-currency auction system, according to the Herald. The system has provided over US$800M to companies since its introduction in June, though high demand for U.S. dollars by importers means that there is only a limited supply.

Monetary authorities met with the Bankers Association of Zimbabwe on April 12 to discuss “due diligence and know-your-customer requirements” in order to ensure economic stability, Mangudya said.

Ralph Watungwa, president of the Banker’s Association of Zimbabwe, didn’t immediately answer two calls to his mobile phone seeking comment.

Zimbabwe reintroduced its own currency in 2019 after a 10-year hiatus and has been battling bouts of high inflation and shortages of everything from foreign currency to food. The local unit, which was pegged at parity to the U.S. dollar as recently as February 2019, has plunged to 84 per U.S. dollar.

The gap between the official exchange rate and parallel market has widened by 36%, with a U.S. dollar selling for 115 Zimbabwean dollars on the streets of Harare.

Source: Further Africa

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