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Local firms in trouble for abusing forex auction

Local firms in trouble for abusing forex auction

by DANAI MWARUMBWA
HARARE, (CAJ News) THE Reserve Bank of Zimbabwe (RBZ) will sanction 18 companies for allegedly abusing the country’s foreign exchange auction system.

They face allegations of flouting the Statutory Instrument 127 of 2021 (SI 127) put in place to provide for penalties against “errant entities that were at the forefront of abusing the foreign exchange auction system to the detriment of the stability of the economy.”

John Mangudya, the RBZ governor, on Tuesday stated investigations by the Financial Intelligence Unit and the Bank’s Exchange Control Division, established the entities were abusing the system.

“Going forward and in line with the recommendations from the business community on the need to continue to enhance stability in the economy, the Bank’s efforts to foster compliance in terms of SI 127 shall be limited to outliers that wantonly abuse the foreign exchange auction system, exchange rate manipulation and noncompliance with anti-money laundering rules and regulations.”

Mangudya said RBZ’s focus on these key areas, coupled with business’s reality check, self-discipline, self-monitoring and peer-review, would sustain inflation and exchange rate stability that are necessary for the economy to continue to rebound.

“The Bank has a duty of care to ensure that the significant progress that the economy made since the introduction of the foreign exchange auction system in June 2020 continues on an unabated positive trajectory whilst at the same time protecting consumers and fostering compliance to engender fair play in the economy.”

The companies facing sanctions include Africa Steel, Classic Energy, Clorex Energy, Duo Valley Commodity Brokers, Explochem and Faircclot Investments.

Others are Flicknik Enterprises, Georgia Petroleum, GlenuLas Trading, Kimya Investments, Mutare Mart & Exchange and National Foods.

Natural Stone Export, Nuvert Trading, Phirebrook Investments, Souzrce Fuels, Tettola Investments, Westvillle Investments are also accused.

RBZ replaced the interbank market with weekly foreign exchange auctions to determine the Zimbabwe dollar (ZWL) exchange rate.

The central bank believes the platform will enhance transparency and efficient distribution of scarce foreign currency.

– CAJ News

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