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Nelson Gahadza-Business Reporter
THE Reserve Bank of Zimbabwe (RBZ), through the Exchange Control department, has issued revised interbank foreign exchange guidelines and compliance parameters to authorised dealers, which include limiting forex invoices to not more than two banks.
In a circular, Exchange Control director Mr Farai Masendu, said while the apex bank recognised that most companies are multi-banked, authorised dealers should for the pipeline demand, limit applicants’ invoices to not more than two.
“This refers to invoices of the same goods from the same supplier without duplicating the same invoice.
“In this regard, authorised dealers should ensure that their clients make appropriate declarations to indicate non-submission of the same invoice through a different authorised dealer.”
Mr Masendu said that this should be done through the completion of the importer’s declaration form prior to the inclusion of the request on the pipeline demand.
“In addition, market participants are encouraged to effectively and efficiently utilise foreign exchange in the management and importation of stocks to avoid speculative stock-piling. Exchange Control will, from time to time, conduct regular checks on this issue.”
The RBZ last month injected over US$50 million into the interbank foreign exchange market to supplement liquidity under the Willing-Buyer-Willing-Seller (WBWS) trading arrangement.
The central bank recently said nearly US$200 million has been traded on the interbank market since the introduction of the new currency in April 2024.
The bank said it had witnessed a build-up in pipeline demand for foreign currency at banks, thus putting undue pressure on the foreign exchange market.
According to the circular, importers with sufficient foreign currency balances are encouraged to fully utilise such funds prior to making new submissions.
“Authorised dealers are advised that foreign currency account (FCA) holders with sufficient balances in their accounts across all banks should first utilise their foreign exchange for foreign payments before accessing funds from the Interbank Foreign Exchange Market or the pipeline demand.
“In this regard, companies intending to fund payments from the interbank market shall sign the importer’s declaration form that they do not have sufficient balances.”
He noted that, as previously communicated under Exchange Control Directive RZ56 dated April 8, 2024, market participants are not permitted to participate in the interbank foreign exchange market using proceeds from local borrowings.
“Accordingly, market participants shall be required to declare on the Importers Declaration Form that the ZiG balances are not from borrowings prior to inclusion of the request on the pipeline demand.”
In terms of Exchange Control Compliance, Mr Masendu said authorised dealers are directed to ensure adherence to all the Exchange Control compliance parameters contained in the circular by all market participants when administering transactions on the interbank foreign exchange market and the pipeline demand.
However, he said market participants found in violation of Exchange Control rules and regulations shall be penalised and/or barred from participating on the interbank market in accordance with Section 5(1) of the Exchange Control Act [Chapter 22:05] and Section 37(i), (ii), (iii) of Exchange Control Regulations, Statutory Instrument 109 of 1996.
RBZ Governor Dr John Mushayavanhu, in a review of the Monetary Policy Statement (MPS), said the bank has been building foreign reserves as the country continues to generate significant foreign currency to meet import requirements.
He said the bank remains an active participant in the interbank foreign exchange market to complement foreign currency supply under the WBWS trading platform to meet all genuine and bona fide foreign payments.
Under the new monetary policy, Dr Mushayavanhu said the ZiG has been anchored and fully backed by a composite basket of reserves comprising foreign currency and precious metals, mainly gold, to ensure that its long-term stability is sustained.
He said the Reserve Bank of Zimbabwe has walked its talk on full backing of the new currency, as reflected by a significant increase in the reserve coverage ratio, from 3 times at 5 April 2024 to 4 times at the end of July 2024.
“The total foreign reserves, including gold, were around US$375 million as of end-June 2024, compared to ZiG total reserve money including NNCDs of US$139 million.
“This was a significant increase from reserve asset holdings of US$285 million when ZiG was announced on 5 April 2024,” he said.
Online Reporter