A civil penalty or civil fine is a financial penalty imposed by a government agency as restitution for wrongdoing. The wrongdoing is typically defined by a codification of legislation, regulations, and decrees.

Zimbabwe has enjoyed notable exchange rate and price stability since the Reserve Bank introduced the auction system on June 23, 2020 to replace the interbank market, which had been adopted early last year and the fixed rate regime introduced in March for certainty of pricing after the outbreak of Covid-19.

In the absence of a market or systematically determined exchange rate, market players depended on their own whims and speculation to decide what the rate should be, which resulted in volatility that led to astronomical increases in both prices and inflation.

Prof Chakravati said there was no justification for the majority of business entities in Zimbabwe to continue to quote prices for goods using parallel market exchange rates when the auction system is now meeting the bulk of the foreign currency needs for importers.

The Zimbabwe dollar exchange rate strengthened marginally during this week’s auction, rising only 0,06 percent firming to $81,4439 from $81,4965 a week ago, a movement of just over five cents.

It has emerged that a handful of defiant retailers, both large and small, are still not displaying dual pricing as required in terms of the law, neither are they using the auction or ruling rate for their Zimbabwe dollar pricing in an attempt to force customers to use forex.

“At the end of the day, all the people should accept the law of the land. There is SI 185. SI 185 which says you can put your prices in US dollars, whatever you like, then you can work that out into Zimbabwe dollar prices, but it must be at the market exchange rate.

“So the penalty is there; that if somebody does not comply with SI 185 they can be prosecuted. This is not the job of the RBZ, but this is the job of the Ministry of Industry and Commerce, they are the ones who are involved with retailers and others,” Prof Chakravati said.

The RBZ, Prof Chakravati added, was working tirelessly to maintain the stability in the foreign exchange market. The apex bank is also mulling additional measures through moral suasion for market players to play by the rules.

“We are going to use additional measures of moral suasion so that everybody, if they are successful in the bidding for forex, they must use the auction rate for pricing of goods and services that they buy using foreign exchange they get from the auction,” said.

Efforts to get a comment from the Ministry of Industry and Commerce, on what it is doing to ensure compliance in pricing, were fruitless.

Eddie Cross, an economist and also member of the central bank’s MPC weighed in saying that they were happy with the stability in the market; noting it provides a conducive environment for the much needed investment.

“We have very considerable potential for investment in the domestic economy. A lot of that potential is unutilised at this moment in time,” he said. Mr Cross said there was sufficient latitude for other economic agents like banks to provide the financing to support the economy.

Mr Cross also reiterated the point that the central bank was putting pressure on all business entities that are getting foreign currency from the auction market to realign their prices to the ruling exchange rate.

“I do not think that there is any justification for maintaining a parallel market rate for domestic pricing because the bulk of the (Forex) requirements for productive sectors are now being met by the auction. I think (Errant large) and small retailers (still using open market rates) are just manipulating the situation,” he said.