Another nail in the coffin of Zimbabwean industry.
For those of you unfamiliar with the situation, the black market is effectively the ONLY market for foreign currency (forex) in the country.
The regime is holding the official / bank exchange rate at an artificially low price, yet have passed a law decreeing that all foreign ccy must be exchanged through the banks.
Because of the shortage of forex, the banks have virtually no forex available anyway. So industry (indeed anyone who needs forex) is forced to go to the black market, where they pay a market-driven price for the forex they purchase.
The only people who benefit from this crazy system are those whose political connections enable them to purchase scarce forex at the bank rate (about Z$4500 = 1 Rand); they then make a killing by selling that same forex on the black / parallel market for anything in excess of Z$70 000 for 1 Rand.
For those of you unfamiliar with the situation, the black market is effectively the ONLY market for foreign currency (forex) in the country.
The regime is holding the official / bank exchange rate at an artificially low price, yet have passed a law decreeing that all foreign ccy must be exchanged through the banks.
Because of the shortage of forex, the banks have virtually no forex available anyway. So industry (indeed anyone who needs forex) is forced to go to the black market, where they pay a market-driven price for the forex they purchase.
The only people who benefit from this crazy system are those whose political connections enable them to purchase scarce forex at the bank rate (about Z$4500 = 1 Rand); they then make a killing by selling that same forex on the black / parallel market for anything in excess of Z$70 000 for 1 Rand.
posted at 5:27 pm
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