Illegal forex dealers face 10 years in jail

HARARE - A new foreign exchange law in Zimbabwe will send unlicensed foreign currency dealers to jail for 10 years.

The long-awaited law, approved by the Cabinet this week, is expected to take effect as soon as Parliament promulgates it next month, Finance minister Patrick Chinamasa (pictured below) told the National Assembly in a ministerial statement yesterday.

“Trading in currency without a licence is an offence. The regulations make it clear that anyone who deals in currency as commodity either at a premium or at a discount commits an offence,” Chinamasa said.

The regulations are expected to be rammed through the bicameral Parliament, where President Robert Mugabe enjoys a commanding two-thirds majority in both houses.

Soon after the ushering in of bond notes as an export incentive last November, US dollars have vanished from banks but are found in abundance on the black market.

A bond note unit — limited for domestic commerce — was been fixed by the RBZ to trade at par with one US dollar.  But some retailers have low confidence in the bond notes and place different price tags on goods dependent on the currency used for payment.

Prices reflect that one US dollar in hard cash is equivalent to $1,40 in bond notes, meaning that the surrogate currency has already lost 40 percent of its value. Zimbabwean firms resorting to the black market in search of US dollars pay a premium of up to 60 percent.

Chinamasa threatened to invoke the new law which will jail anyone trading the fiat currency at a rate apart from what they had officially imposed, a situation that clearly undermines market forces, hence influencing the exchange rates of all currencies trading in the country.

Chinamasa also ruled out price controls. This comes as shortages of basic goods and fuel have resurfaced, sparking panic buying by consumers.

Prices of imported products have also skyrocketed, which businesses blame on shortages of foreign exchange.

“I said in Cabinet I am opposed to the introduction of price controls, it will worsen the situation, this situation need to be solved in a friendly manner,” he told the National Assembly.

Comments (3)

And you think jailing people for trading in currency is not a form of price control?

Doug SA - 29 September 2017

And you think jailing people for trading in currency is not a form of price control?

Doug SA - 29 September 2017

The Soviets tried to run a command economy with their own "home-made" cash which had no value elsewhere. Despite having oïl and gas fields, a market of over a billion people, vast reserves on unused land, and technology that had managed to eclipse the USA in putting a man in space, they failed. Zimbabwe is a far smaller economy, with mineral and fuel reserves no longer viable because of lack of investment, and is trying the same econbomic game. It won't work. It also won't wash with the people. They want to have a life Worth living, not spending hours in queues for commodities that don't exist or banknotes that are meaningless. Now Russia is a cleptocracy run by one of its former secret police guys. Greed and incompetence will make this régime ultimately crumble. Will Zimbabwe go the same way?

M Farjj - 22 October 2017

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