Zimbabwe forex auction is efficient but we have to deal with greediness- minister


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Q &A

*HON. E. NCUBE: Thank you Madam Speaker. My question is directed to the Minister of Finance and Economic Development. What measures does Government have to put to an end the people that are in the habit of waylaying customers in stores such as TM and OK who want to buy using cash and then they offer to swipe on their behalf in exchange for the cash. We ask this because we no longer see Z$2 and Z$5 notes in circulation in shops that we are buying. Is this not what we call mopping up of our cash? What do they need this money for that they are getting from the people who want to buy? I thank you.

THE DEPUTY MINISTER OF FINANCE (HON. CHIDUWA): Thank you Madam Speaker. What I can say with regards to the vice that we are seeing these days where we have got currency dealers who are dealing in the illegal parallel market soliciting for those who are shopping so that they can swipe for them. First of all, I would want to say it is an illegal activity but in terms of the policy, the illegality is on the use of parallel market activities but with regards to someone going in the shop to swipe for whoever on their behalf, at the moment, we do nto have a law that is stopping such practices. So, that is the position that is there but what is illegal is the parallel market activities. Thank you.

HON. GONESE: Thank you Madam Speaker.  My supplementary question to the Hon. Deputy Minister of Finance and Economic Development is whether this is not a symptom because apart from those who are asking consumers for cash so that they can swipe for them, we also have a proliferation of people at our supermarkets who are exchanging USD.  These are asking consumers to give them USD so that they can use either ecocash or a swipe to purchase goods from the supermarkets.

My question therefore is, is this not a symptom that the policies of this Government are not working?  Firstly, there is a shortage of cash which is why people would then go and ask to swipe on behalf of others so that they can get cash.  In terms of foreign currency, the policies that the auction rate is viable are not working because the reason why people would then exchange USD for a different rate is because the current auction rate is not sustainable.

For people who go to the supermarket to continue doing that is because there is  a market and the only reason why there is a market would be that the policies are not working, the auction rate is not sustainable and it is not commensurate with market forces.

HON. T. ZHOU: On a point of order! The Hon. Member is now debating instead of asking questions.

HON. CHIDUWA: Thank you Madam Speaker.  What I would want to submit is the fact that there is a parallel market and the fact that  we have got people who are dealing in illegal activities does not mean that whatever they are doing is correct.

The market is driven by market fundamentals; the Dutch Auction System is an open system where those who would want to buy foreign currency should go and bid.  There is no control over the bids that are submitted by bidders.  Whatever comes from the auction is a reflection of demand and supply.  Anything outside that is done by speculators.  The existence of speculators does not mean that the Dutch Auction System is not efficient.

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Charles Rukuni
The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.

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