THE Reserve Bank of Zimbabwe (RBZ) has warned banks that are refusing to buy forex at the prevailing auction rates from individuals saying this is in direct contravention of exchange cont
In an apparent response to refusal by some banks to purchase forex from individuals, the central bank has since sent a circular to all banks in which it has reminded them that it was illegal not to accept forex from individuals.
“It has come to the attention of the Reserve Bank that some authorised dealers are refusing to buy foreign exchange cash from individuals,” Maurice Mpofu, assistant director exchange control department, said in the circular.
“In terms of Exchange Control Directive RE: 511, dated 24 December 2003, and Section 3.1.7 of Guidelines for the Foreign Exchange Auction System, all authorised dealers are required to buy foreign exchange from NGOs, embassies and small suppliers such as tourists and individuals with ‘free funds’ on behalf of the Reserve Bank at the ruling auction rate for supply to the auction. Please be reminded that failure to comply with this directive is a contravention of exchange control rules and regulations.”
Mpofu was recently elevated to divisional chief of the exchange control after the restructuring at the central bank.
The RBZ introduced the auction system at the beginning of this year. The adoption of the auction system was at the behest of the Confederation of Zimbabwe Industries.
However since the auctions began, the process has been dogged by controversy, since the system is controlled hence accusations it is not a true reflection of the prevailing rates when compared to parallel market rates.
“Commissions and/or charges: Reference is made to the Exchange Control Directives RF:10 of 9 January 2004 and advise that the maximum level of commissions and/or charges to be levied on foreign currency transactions by authorised dealers has been revised upwards, from 0,25% to 0,5% per transaction. Please be advised that the entire 0,5% will be for the account of the authorised dealer.”
However a number of financial institutions are not happy with the 0,5% commission being charged saying that the rates are too low.
Bankers say if this rate is to be accepted it should cover a number of costs which include insurance for handling charges and security.