Forex Auction system is a fraud: Biti

Forex Auction system is a fraud: Biti

Former Finance Minister Tendai Biti says the country’s foreign currency auction system is a fraud because it is not an open auction.

Reserve Bank of Zimbabwe (RBZ) established the auction to try and reduce pressures for foreign currency from importers.

It was also a measure of trying to control the exchange of the US dollar against the local currency.

The RBZ conducts the auction every Tuesday and uses it to set the exchange rate for the ensuing week

Since the start of the auction, RBZ has been supplying the forex while other players have been coming to buy.

According to Biti that does not indicate a proper auction system or an open market.

He said tobacco auctioning presents a good example of a proper auction system where there are many buyers and sellers.

“Madam Speaker, the Dutch foreign exchange is a fraud on the people of Zimbabwe. It is a fraud in this way; firstly, it cannot be an open auction when there is only one supplier of the commodity and the supplier of the commodity is the Reserve Bank.

“There has been no other actor who has been supplying foreign currency, so it cannot be an open market.

“Every tobacco farmer, there are a hundred thousand new tobacco farmers that were created by the land reform program. You go to the auction floor which you want, whether you want TLC or Boka, you sell your commodity.

“There are hundreds of buyers from all over the world, they buy the product. Where you have got one supplier supplying the product, it is an artificial, rigged and deregist market. It is a controlled market,” he said.

Where are exporters taking their forex?

Honourable Biti added that the government should be asking what huge exporters in the country are doing with their forex.

“What the authorities, including the esteemed Minister, should ask is what are those huge exporters like Zimplats who are bringing in millions and millions of dollars doing with their foreign currency which they are not selling on the foreign exchange?

Madam Speaker, I can assure you that by hook and crook, that money is finding its way in Fourth Street and a lot of it is going into grey imports that are flooding this country.

“If you go to Road Port everyday and I wish the Minister could do it, there are hundreds and hundreds of buses that are coming carrying all kinds of goods; televisions, what not what not. It is a grey economy.”

He said because of the distorted monetary policy the country is losing millions to malayitshas through grey-imports from South Africa.

“The artificial controls are actually guaranteeing huge leakages. Madam Speaker, to maintain the apparent stuckability of this artificial auction floor, the government authorities have now moved into, for lack of a better word, a fascist mode.

“The Monetary Policy now says every exporter 70% of your foreign income is now taken. If you go into retail and you buy, 20% of the USD is immediately taken. We cannot do that Madam Speaker. It is illegal.

Forex Auction system is a fraud: Biti

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