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Forex auction fails to tame parallel market

Shakeman Mugari

THE new foreign currency auction that opened on Monday has failed to bring an abrupt halt to the parallel market that continues to flourish.

l, Helvetica, sans-serif”>A visit to Harare’s foreign currency trading spots revealed that the black marketers were still trading as usual. At Harare’s Road Port station it was business as usual with traders selling foreign currency at heavily slashed rates.

On Wednesday the United States dollar was trading at US$1: $3 800 compared to a high of US$1:$7 000 in November last year. The rand slipped to R1:$400. The greenback sold at $4 196 at the foreign currency auction, which opened on Monday. Traders said they were watching the auction market rate with interest. They said they would use the auction rate to determine their own parallel market rate.

“We are not going to use the so-called auctions, it’s for the banks I presume,” said one foreign currency trader.

“For us business continues. If I get a rate of US$1:$3 800 that is fine with me. We would rather get a lower rate on the streets than go to the auctions. What if (police) they arrest us,” said one of the traders.

The parallel market continues to flourish courtesy of crossborder traders and occasional visitors who are still sceptical about the auction system, which entered its second day yesterday.

RBZ governor Gideon Gono confessed ignorance at the continued parallel market practices.

“Where are they trading?” he asked. “For a start that is illegal and we will take appropriate action. The law will take its course. Just tell us where they are trading and we will move in.”

According to a Reserve Bank of Zimbabwe statement, the first day of auction raised US$20,6 million from exporters.

At Road Port foreign currency buyers could be seen milling around the gates waiting for traders arriving from regional countries.

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