FIU directs products price reduction; warns businesses of breaching interbank exchange rate law

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By Reason Razao

RESERVE Bank of Zimbabwe’s (RBZ) Financial Intelligence Unit (FIU) has started escalating and widening punitive measures including freezing bank accounts of delinquent businesses breaching margins of the interbank exchange rate.

In a statement, FIU said businesses charging beyond the 10% margin of the interbank rate exchange were breaching the law.

“The Financial Intelligence Unit (FIU) has noted with grave concern that some businesses are engaging in illegal forward pricing practices thereby manipulating the foreign exchange rate,” read the statement.

“In terms of the law, businesses are permitted to apply a margin of up to 10% above the interbank exchange rate.”

FIU said there is no justification for non-compliance with the legal margins in light of the recent implementation of a market determined interbank exchange rate system.

“The forward pricing and non-compliance with legal limits is being done at the detriment of the consumers who bear the brunt of the resultant unjustified pricing of goods and services.”

The intelligence unit warned businesses contravening the law will also have their licenses revoked or suspended.

“With immediate effect, the FIU will be escalating and widening remedial and punitive measures against delinquent businesses by not only imposing administrative fines but also directing that culprits’ bank accounts be frozen indefinitely and referring the culprits to relevant authorities for the suspension/revocation of trading or operating licenses and prosecution.”

The liability, according to the statement, will also be extended to directors and owners of the concerned businesses.

The ZWL tumbled against the US$ forcing the market to make upward adjustments of prices to cushion themselves against inflation.

On Tuesday, the ZWL depreciated by 43% on the RBZ Foreign Exchange Auction market effectively closing the parallel market gap which had become a source for market arbitrage in recent weeks.

A trading update released showed that the official exchange rate had hit US$1:ZW$3 673 to signify a 42,5% decrease in just one week.

A fortnight ago, the exchange rate depreciated to US$1: ZWL 1 888 down from US$1: ZWL1 404 signifying a 34% decrease inside just one week.

Three weeks ago, the ZW$ recorded another 14% fall recorded over and above the 36,4% decline recorded last week which saw the exchange rate weakening to US$1:ZW$2 577.

This follows a series of measures by Finance Minister Mthuli Ncube aimed at stabilising the ailing local currency.