Bureaux de Change’s need transparency and freedom not constant tinkering

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On Friday the Reserve Bank of Zimbabwe made another proposed policy change regarding the operations of Bureau De Changes in Zimbabwe. Apparently the Central Bank is mulling a series of measures that they claim will “capacitate” the neutered exchanges which have been a non-event in the forex market for months.

Below is a full text of the RBZ notice:

PUBLIC NOTICE

EMPOWERMENT OF BUREAUX DE CHANGE TO ENHANCE THE OPERATIONAL EFFICIENCY AND EFFECTIVENESS OF THE INTERBANK FOREIGN AND EXCHANGE MARKET

Pursuant to the deliberations of the Monetary Policy Committee and representations from various stakeholders on the need to enhance the activities of bureaux de change on the interbank foreign exchange market, the Reserve Bank will capacitate bureaux de change and enhance their buying and selling activities under a comprehensive compliance framework.

This arrangement will culminate in improved visibility of bureaux de change and improve their contribution towards an effective and efficient interbank foreign exchange market.

J P MANGUDYA GOVERNOR

6 March 2020

Why not just let Exchanges have free reign?
Bravo to the RBZ’s attempts to “capacitate” exchanges however here is a thought: Why not let exchanges have free reign and operate freely? Better still: Why not make the interbank open to all, and use a transparent trading system, then there will be no need for Bureaux De Change’s to play such a big role?

The only reason why these exchanges have virtually become useless is all thanks to the central bank’s measures and unparalleled desire to drive the rate down. Last year in September they issued a set of measures that required these exchanges to offer rates within a 7% band of whatever the interbank rate is.

Given how artificially low and opaque the interbank rate is, that was a death blow which mortally wounded these exchanges. A mortal wound from which they haven’t recovered. In the meantime, the interbank rate, far from being the thriving market which we were promised, has become a mere vague number used in official government calculations.

By the Bank’s own admission very little foreign currency is traded at this rate.

About the Author:
Garikai Dzoma is a business-tech blogger, you can find more of his ramblings at zimpricecheck.com

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