Opinion: Arresting illegal money changers will not protect ZIG from losing value 

by | Apr 17, 2024 | Opinion and Analysis | 0 comments

Staff Reporter

The nation recently woke up to receive news that the police will arrest illegal money changers to protect the newly launched Zimbabwe Gold currency from losing value.

Apparently, illegal money changers were accused of causing the loss of the value of the Zimbabwean Dollar that is being phased out. On numerous occasions, forex dealers were accused of causing currency speculations that resulted in the crumbling of the Zimbabwean Dollar.

While it is the mandate of the police to arrest illegal forex dealers as required by the law, the move will not protect the ZIG from losing value. Illegal forex dealers are simply taking advantage of the huge appetite for the US Dollars in the Zimbabwean economy where almost every commodity and consumable is imported.

What makes the parallel forex market to thrive is that the demand for the US Dollar in Zimbabwe is very high while its availability in formal banks and financial institutions is almost non existent.

Zimbabweans spend US Dollars in almost every essential thing in their lives. They pay rentals, buy fuel, properties, motor spares and a lot of things in US Dollars. This has led to a situation where even those who earn in local currency are forced to use their salaries to buy forex for them to pay for their basic necessities.

On top of those who source forex from the black market for individual needs are big companies and manufacturers who procure almost every raw materials and tools of trading outside Zimbabwe. These companies are usually the ones that source larger amounts of money from the parallel market.

So instead of relying on arresting illegal forex dealers, which is a mammoth task for law enforcement agents to conduct considering the number of people who are in that trade, government should focus on inspiring the nation to have confidence on the new money.

This can be done through employing various strategies to ensure that the money maintains its protracted value, and providing information to dispel various misconceptions that people have towards the money.

Once people gain confidence in the ZIG, the demand for foreign currency will recede and this will automatically eliminate illegal forex dealers from trading. The Reserve Bank of Zimbabwe and the Ministry of Finance should strengthen the ZIG to maintain its value such that no individual will find a reason to buy US Dollars to store the value of their earnings.

A person or a company should have the confidence to keep their local currency earnings in their original value.Our monetary authorities should work to push out illegal forex dealers by strengthening the local currency to ease the demand of US dollars by the people and businesses. Arresting them will obviously not work.


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