RBZ to lift lending restrictions this week

• As investigations confirm the existence of detractors abusing the Forex Auction System.

Brian Rungano Temba

Reserve Bank of Zimbabwe Governor Dr John Mangudya has confirmed that the recent restrictions on bank lending facilities are going to be reviewed this week.

This follows thorough investigations by the Financial Intelligence Unit which confirmed suspicions that the Forex Auction System was being abused by currency manipulators in a process called Currency Attack.

In an interview with a local weekly publication, Dr Mangudya said that a review of the moratorium is on the way most likely this way as the Bank is in the process of remedying the situation.

"The suspension will be reviewed next week. What we have found out is what I have told you, that other corporates were heavily borrowing from the markets or from the banks for the purposes of using that money to purchase their products and manipulating the exchange rate, which is called currency attack," said Dr Mangudya.

The RBZ boss said that investigations revealed that the activities were depreciating the currency so that the culprits can make a profit through repaying the loans at a negative interest.

"They make a profit from borrowing because the adjustment in the exchange rate is higher than the interest the bank will get. This is why the interest rates route was never going to work for these guys," explained Dr Mangudya.

He also dismissed International Economist Steve Hanke's prescription for the problem as futile in the case of Zimbabwe which has a conscious and highly adaptive black market.

Steve Hanke had written in one of his recent articles on the Zimbabwean Economic situation that interest rates need to be hiked to 166 percent.

Said Dr Mangudya, "Even if you put 166 percent, they will send the parallel market rate to much higher than the value of the interest. By doing so, you continue to chase your own tail because they are moving the target. Because their job is to attack the currency."

The creation of an opportunity to derail the nation has been fully blamed on banks and RBZ who have seemingly entertained and abetted these shenanigans through inaction.

The Central Bank Chief assured the nation that further investigations will be done to root out the source of funds flooding the market.

"Are they any crypto currencies in the economy which are being created or is there someone who is not the central bank or the banks. So that at least we move the blame from the banks and RBZ to those other people," he added.

Source: TateguruTv.com

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