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Zimbabwe bans bank transfers
Last Updated on
Saturday, 04 October 2008 20:50
Saturday, 04 October 2008 20:43
Zimbabwe’s central bank on Friday outlawed one of the last functioning parts of the country’s ravaged financial system, hampering businesses already brought to the brink of collapse by rapidly worsening hyperinflation.
Gideon Gono, governor of the Reserve Bank of Zimbabwe and a close ally of President Robert Mugabe, suspended electronic transfers between banks on the grounds that they were “being used for illicit foreign exchange deals” and to charge excessive prices for goods and services. “We have no option but to take this drastic measure in order to maintain sanity in the financial system,” Mr Gono was quoted as telling state radio.
With cash scarce and card payments cumbersome, businesses have relied on transfers between bank accounts to settle transactions with suppliers and receive payments from customers. The transfers take a day to be completed, making them far preferable to cheques, which require a minimum of five days to clear – by which time their value has plummeted.
The central bank, blamed by many analysts for destroying the value of the Zimbabwean dollar by printing money with abandon, says prices are rising at an annual rate of 11.2m per cent. However, Steve Hanke, economics professor at John Hopkins University, last week used market price data to calculate that inflation has reached 531bn per cent, among the highest rates ever recorded.
With their foreign exchange coffers long since emptied, the authorities last month partially lifted a ban on trading in overseas currencies. One Harare economist, who asked not to be named, said some traders were speculating on dizzying fluctuations by covertly supplying currencies such as South Africa’s rand in cash in exchange for electronic transfers of Zimbabwean dollars, prompting Mr Gono’s ban.
“The measure will make life very difficult for business,” said the economist. “But it’s all fire-fighting. People are doing that [speculating and raising prices] because of the distortions in the economy.”
Barclays, which operates 78 branches in Zimbabwe, said it had received the directive and that customers would have to use other ways to make payments.
The deterioration of Zimbabwe’s economy has accelerated during months of political paralysis following contested election results in March. A power-sharing deal brokered last month between Morgan Tsvangiari, the opposition leader who won a shock victory in the first round of the presidential poll before withdrawing, and Mr Mugabe has run aground over the allocation of ministries. - FT
With cash scarce and card payments cumbersome, businesses have relied on transfers between bank accounts to settle transactions with suppliers and receive payments from customers. The transfers take a day to be completed, making them far preferable to cheques, which require a minimum of five days to clear – by which time their value has plummeted.
The central bank, blamed by many analysts for destroying the value of the Zimbabwean dollar by printing money with abandon, says prices are rising at an annual rate of 11.2m per cent. However, Steve Hanke, economics professor at John Hopkins University, last week used market price data to calculate that inflation has reached 531bn per cent, among the highest rates ever recorded.
With their foreign exchange coffers long since emptied, the authorities last month partially lifted a ban on trading in overseas currencies. One Harare economist, who asked not to be named, said some traders were speculating on dizzying fluctuations by covertly supplying currencies such as South Africa’s rand in cash in exchange for electronic transfers of Zimbabwean dollars, prompting Mr Gono’s ban.
“The measure will make life very difficult for business,” said the economist. “But it’s all fire-fighting. People are doing that [speculating and raising prices] because of the distortions in the economy.”
Barclays, which operates 78 branches in Zimbabwe, said it had received the directive and that customers would have to use other ways to make payments.
The deterioration of Zimbabwe’s economy has accelerated during months of political paralysis following contested election results in March. A power-sharing deal brokered last month between Morgan Tsvangiari, the opposition leader who won a shock victory in the first round of the presidential poll before withdrawing, and Mr Mugabe has run aground over the allocation of ministries. - FT
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written by Thuthukani Mkhize , October 07, 2008
It is amazing to see, how selective the media has become. The problems facing Zimbabwe are all blamed on Mugabe. The West imposed sanctions on Zimbabwe, and everything is falling apart. Now the Western Countries eceonomies have collapsed, banks are bankrupt and yet their money is still worth more than any African currency, why? The truth should be known. How come the west can tell Africans to privatise and sell to the highest bidder, whilst if the same applies to them, they nationalise their companies. How come the media does not ask questions and how come thier money and inflation still remains below 5%? We need to know what caused the meltdown and the collapse, how come they are so qucik to tell us how about the prescriptions and they are faling to correct and apply the same to themselves? We need to know more than what we have been told so far, as the western media does not cover their failures as much as they cover ours. Why is it our media fails to do the same when it comes to showing a positive light on our countries, instead of this talk of democracy which the western countries themselves are failing to live up too? Capitalism and democracy of 2006 as we knew it will never be the same again, since there is a new system being introduced of protectionism, socialism mingled with a selective capitalism and communism is the way forward. So lets start talking about the way forward of bringing our in the twenty first century development and there is not AID coming from anyone, since the west are broke.
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written by Thuthukani Mkhize , October 09, 2008
Meltdown, what comes after meltdown, please create a new word for us. You called the Zimbabwean Dollar toilet paper. Certain things need to be understood. How is money rated, who rates it, why do they peg the way they peg it? So what is the face value of the US$, the true value. The Icelandic krona is toilet paper, zero value, but its pegged higher than the Rand, how come? Interbanking rates are based on LIBOR RATE, what is LIBOR RATE based on? That is why the Zimbabwean dollar is suffering, not because of internal politics. Please know your facts first. So if was internal issues which affecting the Zim$, why are all currencies and interest rates based on the LIBOR RATE? The problems of blaming everything that goes wrong in Zimbabwe on Mugabe is just childish, for remember Mugabe does not have a bank. So if the British banks like Barclays Bank and Standard Chartered decided to work against a currency there is nothing the politics can do. The only countries which can nationalise are the very same countries which call themselves democratic. The Banking group ANZ actually closed its doors, wont operate in a black run country. What would we call that, Racism. So lets know how business is ran, so if Mugabe says he is to nationalise for the interest of the country, he will be labelled a Dictator and corrupt. The British have nationalised the financial sector and no-one have pulled out their capital from other sectors in fear of losing their businesses, as the developed countries play by the book. If the world believes that then we are all suckers and fools. So the Zimbabwean dollar is actually being attacked from Europe, so who is attacking the European currencies which are superficially pegged, yet those currencies are worthless, toilet paper.
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