EDITORIAL COMMENT: Exchange rate manipulators sabotaging economy

06 Oct, 2019 - 00:10 0 Views
EDITORIAL COMMENT: Exchange rate manipulators sabotaging economy President Mnangagwa

The Sunday News

IT is no longer a surprise to find people discussing the foreign currency exchange rate, especially pertaining to the US dollar and the South African rand in relation to the local currency.

The interest in the movement of the exchange rate has been compounded by the ever increasing prices of basic goods and services, as the business sector tries to match the prevailing forex exchange rate of a particular time. While the business sector is wrong to peg prices on the exchange rate, what has made prices of goods and services go up is the ever increasing rates.

The rates keep on increasing with no economic backing at all, and further eroding the disposable income that people have. What has been discovered thus far is that there are certain people whose business is to buy foreign currency in the streets and to make sure they mop up every foreign currency available, they offer high rates, thus forcing the business to also up its prices for goods and services. And by so doing, they are ultimately sabotaging the economy, Government and the entire nation.

We therefore, applaud Government for taking steps to stop the rot by freezing bank accounts of some companies suspected to be involved in illicit deals. Furthermore, it has moved to deal with arbitrage in the financial sector by closing the loopholes which enabled unscrupulous people to sell cash in return of higher balances using EcoCash. Giving the State of the Nation Address last week, President Mnangagwa said foreign exchange rate manipulation amounts to economic sabotage and would not be tolerated. 

“We all need to adhere to the rule of law and foster discipline at all levels. We are determined to consolidate digital financial services which are contributing to the creation of financial inclusion by way of delivering banking services to previously unbanked and vulnerable groups of our population,” said President Mnangagwa.

In addition, the President said Government was aware of the challenges faced by citizens in accessing cash, resulting in some unscrupulous traders selling cash in exchange for electronic money. 

“Appropriate measures are being taken to address the cash situation, which include a gradual removal of arbitrage opportunities created through multi-tier pricing,” said President Mnangagwa.

President Mnangagwa said Government had noted with concern the emergence of monopolies and cartels which stifle competition and engage in unjustified price hikes. He said while Government will not revert to price controls, it was in the process of reviewing the Competition Act to introduce deterrent penalties to combat such business malpractices.

We also urge Zimbabweans to shun black market activities. And here is why; “A black market is a transaction where goods or services are exchanged illegally. What makes the market “black” can either be the illegal nature of the goods and services themselves, the illegal nature of the transaction or both.” (Fontiella, 2019)

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