CASH dealers have invaded the tobacco auction floors in Harare hunting for the scarce greenback in exchange of bond notes, following the opening of the marketing season last month.
Tobacco growers are this season getting half of the $300 payment per sale in the form of US dollars, thereby attracting illegal forex dealers to the floors.
Money changers who traditionally were confined to Roadport and Copacabana environs in Harare’s Central Business District (CBD) have become ubiquitous in the city due to the biting cash shortages in the country.
Apart from the informal traders selling all sorts of wares at the floors, hordes of illegal forex dealers were last week seen by NewsDay milling around the tobacco sales floor premises holding wads of bond notes.
A money changer who spoke to NewsDay said he relocated to the floors from the city centre lured by the huge circulation of the greenback at the tobacco floors.
“I decided to come here after the opening of the tobacco season to buy dollars here in exchange with bond notes. We go where the money is, as you know that there are now many of us in the CBD chasing the same clients. Since I came here business is flourishing,” the dealer, who identified himself as Biggy said.
He was paying a 20% premium to get dollars in exchange for bond notes and was not offering electronic transactions such as bank and mobile money transfers.
As of April 12 , 23,7 million kg of tobacco valued $ 65,4 million went under the hammer at contract and auction floors as at least $30 million of fresh greenback was injected into the market.
Economist John Robertson said cash barons were taking advantage of the distortions obtaining in the market.
“It’s a reflection of the general scarcity of cash as well as lack of confidence in the economy. It’s obvious money changers are attracted by the greenback given to farmers at the tobacco floors. They want to make the profits through the distortions obtaining on the market,” he said.
Zimbabwe adopted a basket of currencies including the South African rand, US dollar, British pound, Botswana pula, Chinese yuan, Australian dollar, Indian rupee and Euro to stem hyperinflation.
The dollar dominated the market and subsequently went scarce leading to the introduction of bond notes in 2016, which monetary authorities pegged it at par with the greenback.
Since then, there has been a market discrepancy involving the dollar, bond note and plastic money resulting in the trading of the dollar at a premium on the parallel market.
The selling of money on the black market was banned in September last year when former President Robert Mugabe issued Statutory Instrument 122A of 2017 — Exchange Control (Amendment) Regulations 2017 (No 5) — to tame rife cash vending on the streets.
The law empowered police to arrest money peddlers and take hold of the traded currency.–Newsday