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#MondayBlues:Mangundya vs Black Market, who really is winning?

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Governor of the Reserve Bank of Zimbabwe (RBZ) Dr John Panonetsa Mangudya banned Ecocash Cash-in and Cash-out and agents the primary means through which illegal traders buy and sell foreign currency. This dampened the market and has driven the sellers even further underground. Thanks to these actions the Ecocash rate on the black market has remained closer to the cash rate as there is very little movement of funds in this arena. This reporter does not illegally trade in foreign currency but investigations by TechnoMag reveal data as obtained from various sources including market drivers, market watchers, and WhatsApp groups based on what illegal traders are offering or asking for. There is an undeniable link between prices in Zimbabwe and the black market exchange rates which a lot of businesses, including retailers and manufacturers use to compute their prices.
Thanks to the RBZ Governor efforts in steadying the rate which was spiraling out of control before he read the riot act with a cocktail of measures. The reality though is that some use the average foreign currency auction rate with caution treating it as a rough guide rather than for internal calculations. Reasons for disqualification include things like the need for the foreign currency not being on the list, the bidding company has what appears to be adequate foreign currency in their accounts, companies that seem like they are externalising etc. What all this means is that demand for foreign currency still far outstrips supply and some people/entities who wanted foreign currency were not able to get it. More often than not these entities find a way to get that foreign currency as failure is not an option.

It is in this light that the fight between the official currency rate and that from the black market or implied is a fight for the ages.Data published by the Reserve Bank Of Zimbabwe (RBZ) shows that the Governor of the Reserve Bank Dr John Mangudya has managed well getting the bulk of forex whose trading takes place on the forex auction and that alone is a plus. However, this market is not yet open to individuals who earn RTGS and are in need of forex for example: Individuals who want to pay their pay-TV such as DSTV, subscriptions which are only payable in USD. Almost US$100 million is being spent on this, including individuals looking to pay fees for themselves or their children in foreign universities. Also people who want to import vehicles and other goods and services for themselves, and informal businesses whose import needs are not in line with the foreign currency priority list need to access the same forex but how? This is where the parallel markets comes in and feeds in.

The following is an indication of the reality on the ground.

Nostro USD/USD Notes 10%
Nostro USD/ZWL Notes $130
USD / ZWL$ ZIPIT/Bank^ $150.00
USD / ZWL$ Swipe*** $150.00
USD / ZWL$ OneMoney $135.00
USD / ZWL$ Ecocash $13500
USD / BOND* or ZWL Cash $125.00
USD / BOND** or ZWL Cash (USD1 Notes) $125.00
USD / ZWL$ RBZ Average Official Rate $85.9084
USD / ZWL$ Skrill 150.00
USD / ZWL$ Bitcoin 160.00
USD/USD Skrill 1.02-1.05
USD/USD Bitcoin 1.07-1.15
Rand/ZWL OneMoney & Ecocash R142: 1250 ZWL
Rand/ZWL ZWL Cash R142: 1250 ZWL
Rand/USD You buying Rand using USD 14.20: 1 USD
Rand/USD You buying USD using Rand 14:30: 1 USD
Investigations by Technomag last got an update on the above on 25 August 2021 and this from research from officials and market forces at play. There is a difference between the rate that shops use for their calculations e.g. when you have to top up in ZWL notes (bond) versus the rate you will get by illegally selling USD on the streets. For example, shops currently use a rate of $130 ZWL cash per 1 USD but when you sell on the streets you will likely only get about $ 120 ZWL.

 

Whilst informing you about the latest prices, interested in other rates means we must include both of them as done above.

Due to an acute change problem in the market $1 USD notes sometimes (but not always) sell a premium. Usually indicates the rate paid by dealers who deal with amounts of above US$100 and the implied rate used by shops when selling their wares. Small and middle dealers who interface with people in the streets pay the rate somewhere near that indicated by ^.
Some people have been seen advertising to buy Nostro USD in exchange for Cash USD at a discount. Even though Skrill has announced that it will close Zimbabwean accounts, Skrill balances are coveted by people who are into gambling and forex trading. It’s not as coveted as Bitcoin which offers people the ability to move funds around away from the gaze of authorities. Bitcoin is also used in gambling and forex trading.
Something important to note though is that these rates are there to help you navigate and make sense of prices offered in some shops which either a high rate e.g. Tuckshops, Pharmacies or deduce the implied rate used by some shops to set their prices based on what they sell their products in USD for in their online stores and ZWL in brick and mortar stores. It should not be used as a guide to the black market.
This should not be used as some magical guide to the world of illicit foreign currency trading either but these are invedstigations done by this reporter more interested in the prices of various items than anything else and will continue to focus on that aspect.

You may want to know how are implied rates calculated?As already pointed out this report is primarily interested in prices. So here is an example, of how they come up with the implied rates. The bulk of employed people in Zimbabwe are civil servants who earn RTGS. If we pose as a person who wants to buy something in RTGS, walk into a pharmacy or shop which sells primarily in USD. There is an item x selling for US$1 and we ask for the RTGS price.
The cashier pulls out their giant business calculator or enters a mysterious code into their system. And a few moments later, you are told a price. This usually goes along the lines of “If you are paying using Swipe/ZIPIT you will have to pay $150 ZWL.” When we get home we pull out our own calculators and attempt to come up with the rate that was used.

Other Things to note from investigations by TechnoMag are that the Zimbabwe Stock Exchange (ZSE) has resumed operations but Old Mutual shares are now not being traded on it.The new official rate is determined by an auction which is carried out once a week. The above official rate will last for a week after the auction. Who then is winning the official rates led on the fron by RBZ Governor Mangudya or the implied rates? Only time will tell.

Ross Moyo

TelOne conducts 150 calls per day with a 30 seconds response time

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