Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya has today accused companies of abusing the Foreign Exchange Auction Trading System by acquiring foreign currency from the central bank and then selling sourced products using outside currency a process known as double-dipping.
This follows the central bank’s ban on twelve companies from participating in the foreign currency auction following reports of abuse on the trading system.
Mangudya told the Parliamentary Portfolio Committee on Budget, Finance and Economic Development that to curb the abuse the RBZ is going to publish companies that are using the trading system so as to alert on those that are double-dipping.
Currently, there is no legal fine or any framework policy to curb those that are abusing the auction system according to the Governor.
Banning firms from the auction flow has been RBZ’s weapon on those that abuse the auction system
The other way has been to freeze accounts of those that are caught in the act of double-dipping.
Mangudya promised to start audits on companies that are using the auction system and yet not depositing foreign currency in banks as a way of investigating and catching those that are abusing the system.
The central bank is also formulating a legal framework to deal with abusers and the RBZ governor took the opportunity today for the lawmakers to support the production of an act that hinders double-dipping.
Mangudya praised Delta Beverages as a company that has not been abusing the auction system during today’s hearing.
RBZ used the auction system to stabilise Zimbabwe’s inflation that had risen to over 800% last year.