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

Our system is efficient but what we need to deal with is the issue of greediness, economic saboteurs and those who think that they can benefit from arbitrage. Arbitrage is not only existent in Zimbabwe. Speculators are everywhere and the issue of the differential between the market and the parallel market rate is not something that is peculiar to Zimbabwe, it is everywhere.  The moment the differential is driven by greediness, then it becomes a challenge to us and this is why we had to come up with those intervention measures but in terms of the efficacy of the auction system, we are happy that the auction system has brought stability in prices.

However, whatever problems that we are facing because of the intervention that we have made, these are transitory problems.  It is a normal economic activity.  What we are doing in terms of the intervention that we have done is that we are mopping up excess liquidity in the market.  You will see that this is going to curtail a number of those parallel market activities.  In terms of the efficacy of the market, we are happy with the performance and what is coming out of the market is a reflection of market forces, demand and supply for foreign currency.  I thank you.

HON. MUTOMBA: My supplementary question to the Deputy Minister of Finance and Economic Development is that is it not possible to come up with a Statutory Instrument which must enforce these supermarket dealers or business people not to trade in cash.  Their business is to trade in goods, now, if we are letting these people trade in cash, it means they are now competing with banks or Bureau de change.

Why are we allowing them to trade in cash? What could actually be happening is that they will be selling products, cash is being left at the till and that cash is taken into the rmarket so much that they can buy the entire USDs which is supposed to be coming in so that we can get some tax.  I thank you.

HON. CHIDUWA: Thank you Hon. Member. We have already started engagements with the Confederation of Zimbabwe Retailers to ensure that they rein in their members.  We started off with moral suasion.  From the monetary point of view, it is not difficult.  We can wake up tomorrow and limit all swipe transactions per card to one shop.  This will mean that people may not be able to swipe more than twice in one supermarket.  Again, these are some of the policy options that are there but at the moment, we have engaged the CZR and they are engaging their members.  After that, when we do the review, if it continues, then we will be able to come up with policy interventions.  However, at the moment, we are at a stage where we are engaging the retailing community to stop the practice.

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