Is RBZ shifting position?

Is RBZ shifting position?

Pauline Hurungudo

THE Reserve Bank of Zimbabwe (RBZ) has given its clearest hint to date that the country is slowly re-dollarising after upgrading the Real Time Gross Settlement (RTGS) platform to include the United States dollar (USD) to facilitate settlement of the USD Nostro foreign currency account (FCA) transactions.

This comes just four months after the central bank ordered commercial banks to separate bond-note accounts from those holding foreign currency balances.

The multiple currency system has remained a janus-faced debacle that has perpetuated the double-edged sword of a three-tier pricing system in the country. 

Under the phenomenon called three-tier pricing, retailers charge customers three different prices for goods and services depending on the brand of dollar being used: a paper US dollar price, another in “plastic money” or local US dollar-denominated bank deposits transferable by debit card, and the last price in terms of relatively paper money called bond notes. 

Under three-tier pricing, those who pay with US dollars get the lowest price while anyone who pays with plastic money faces the highest price.

In the last few weeks, scores of companies have been shutting down due to currency distortions as government insists on maintaining the multiple currency system at a 1:1 US dollar to bond note ratio.

But last week the central bank relaxed exchange controls by allowing financial institutions to electronically exchange transactions in the US dollar Nostro FCA accounts.

 “We advise that the RTGS platform has been upgraded to include the United States dollar to facilitate settlement of the USD Nostro FCA transactions,” RBZ financial markets division — national payment systems deputy director Josephat Mutepfa said in a statement.

“The function is now available in the test environment for the testing by participating institutions.

“All participants are urged to send test messages end to end to ensure full cycle of the transaction is completed.

“Results of the test should be logged immediately on the attached user acceptance testing form and submitted to the reserve bank on a daily basis until Friday 1 February 2019.

“It is expected that the settlement of USD transactions will commence soon thereafter in the live environment”

Economic analysts said this was a positive move set to promote ease of business, although it will eventually officialise a two tier-pricing system.

“Deliberately or inadvertently, what (Finance minister) Mthuli (Ncube) has done is to create, or perhaps entrench, a mechanism for dual pricing in Zimbabwe,” analyst Farai Mutambanengwe said.

“The moment this system goes live, pretty much everyone will have a Nostro account, and will quote two prices: an RTGS price, and a USD price, depending on how one is to pay.

“This is already happening, as we all know. But for exporters, they were not fully able to exploit this, as their funds were mostly stuck in bank accounts.

“Going forward, however, they will now be able to pay other local suppliers in USD, obviously at a discount to RTGS price, depending on market conditions.”

Renowned local economist Kipson Gundani said because the Monetary Policy Statement is imminent, there will likely be the eventual relaxation of the 1:1 ratio in the multicurrency system

“Given that nostro FCAs are exempted from the 2 percent tax, it’s most likely that most people will shun RTGS and go for Nostro RTGS that means re-dollarisation which I think is not the best way for Zimbabwe given all the troubles of a dollarised economy,” he said referring to the 2percent tax   on mobile and card payments and bank transfers above $10 introduced last October but with exceptions for foreign payments and transfer of government funds.

“This is indeed a dual currency economy and official two-tier pricing. A more distorted economy. It’s a tricky situation,” he said.

Carren Pindiriri echoed this, saying FCA accounts can transact using transfers from one FCA to the other.

 “But RTGS in foreign currency requires backing. Maybe the Central has generated enough resources to support RTGS in foreign currency,” Pindiriri said. 


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