Zimbabwe’s monetary authorities expect the interbank foreign currency exchange market rate and the illegal market rate to converge “within the next three months.”

The official forex trading market was introduced at the announcement of the February 20, 2019 Monetary Policy Statement by the Reserve Bank of Zimbabwe governor Dr John Mangudya, with an initial rate of 2,5 to 1 United States dollar.

But the generally unattractive rate prevailing on the interbank market has meant that holders of the US dollar are choosing to hold or at least sell on the black market.

As of today, the interbank rate was at around 3,3 to the US dollar, compared to parallel market rates of between 4,1 and 4,85 to the US dollar.

Although the official rate has been moving, it is still lagging the black market rate.

But officials remain optimistic both in the short- and long-term.

“Within the next 3 months we will have convergence of the illegal and the interbank market rate,” said RBZ governor Dr John Mangudya today.

This comes after the Confederation of Zimbabwe Industry (CZI) recently made a call for a “truly floating foreign exchange rate”, which they said would improve foreign currency trading on the interbank market as well as its availability in order to ease the effect of parallel market rate premiums on prices.

Officials have maintained that the interbank market will not be manipulated, and some of the key measures that will curb manipulation of the system include daily publication of the previous day’s rates, and banks are required to report activities of the inter-bank foreign currency market to the central bank that shall closely monitor the foreign currency trades on a daily basis using the form and format stipulated by the RBZ.

Bureaux de change and their agents are also required to report their activities of the inter-bank on a daily basis to the central bank.

But with the official rate still significantly trailing the parallel market rate, trades on the official platform have been almost non-existent.