Zimbabwe nabs 65 illegal currency traders as new gold-backed ZIG slides on parallel market

By bne IntelliNews April 23, 2024

Zimbabwe's government has, in response to a depreciation of a currency introduced on April 8, arrested 65 alleged illegal currency dealers and closed bank accounts of businesses suspected to be trading only in US dollars.

The unit, Zimbabwe Gold (ZiG) which trades at about 13 to the greenback on the official market, is changing hands at up to 20 on the alternative market. 

Determined to defend the new gold-backed currency, President Emmerson Mnangagwa's government has warned of strong action against individuals and entities who are deemed to be undermining the southern African nation's sixth currency since 2008.

The 65 appeared before two magistrates in Harare, the capital on April 22 facing charges of contravening exchange control regulations and were remanded in custody to April 24 for bail hearings.

But business executives told a parliamentary committee on April 22 that heavy-handed tactics are unlikely to work, Voice of America (VOA) reported on April 23.

"This is an inception process of a monetary policy shift," said Sekai Kuvarika, the chief executive officer of the Confederation of Zimbabwe Industries. "So, let's give ourselves time. Let's give the market time. Let's give the policymakers time to iterate how the policy is going to work in our markets. But we definitely do not support that we accompany our policies with the police.”

Finance Minister Mthuli Ncube and the new central bank governor, John Mushayavanhu, were supposed to appear before the committee, but they did not show up, according to VOA.

Owen Mavengere, with the Institute of Chartered Accountants of Zimbabwe, said it is wrong for the government to charge some duties exclusively in foreign currency and urged authorities to lead by example.

"The parallel market and those dealers in the streets are a symptom of the problem," Mavengere said. "Sending the police doesn't inspire confidence. So, we would rather have a situation where we handle the root cause. And use a soft approach."

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