Business

New Forex Rules Sends Business In Panic More

President Emmerson Mnangagwa’s move to introduce a host of changes that effectively banned the use of foreign currency in local transactions has left business in panic mode amid fears of steep price increases.

The Presidential Powers (Temporary Measures) (Financial Laws Amendment) Regulations, 2021, introduced last week forced businesses to use the US$1:ZWL$84 exchange rate.

They also made it illegal to give customers a discount for paying for goods or services in foreign currency, refuse to take local currency payments at the official exchange rate and to issue Zimbabwe dollar receipts for goods paid for in foreign currency.

The move has seen businesses either conveniently going into stocktaking exercises as they assess the situation and come up with viable solutions, while others resorted to increasing US dollar prices by more than 40% to close the gap between the black market and official auction system exchange rates.

Industry has flatly rejected the policy measures, under SI 127 of 2021, describing them as a new threat to their existence.

Industry sources, who requested not to be named, said business was in trouble in the wake of the new policy.

“Some companies had borrowed heavily in Zimbabwe dollars despite arguably high interest rates banking on the parallel market rates, but this has been scrapped now and we are in trouble,” said the source, adding that the forex auction system was flawed and useless.

They said imports would be the only option as US dollar and Zimbabwe dollar prices will go up by at least 40%.

“What is happening is that there is a huge delay on the auction, your Zimbabwe dollars are deducted to pay for forex and sometimes it takes a long to come,” the source added. -Hararelive

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