“Black Market ZiG to US Dollar Rate to Drop”: RBZ Reveals Why Local Currency Holders Will Control Exchange Rates Soon
The Reserve Bank of Zimbabwe (RBZ) expects black market exchange rates for the Zimbabwe Gold (ZiG) against the US dollar to drop starting this March as demand for the local currency rises.
RBZ Governor John Mushayavanhu explained that the upcoming quarterly payment dates (QPDs) will push businesses to acquire more ZiG, leading to a drop in black market rates.
RBZ Predicts Major Drop in Black Market ZiG to US Dollar Rates
Speaking on a special edition of ZTN’s Beyond the Dollar podcast on February 28, Mushayavanhu highlighted a similar trend observed in December when banks scrambled to secure ZiG balances for tax payments on behalf of foreign currency holders.
Mushayavanhu noted that the black market rate had already shifted from US$1:ZiG35 to US$1:ZiG30 and predicted further declines.
“We were hearing of rates of about US$1:ZiG35, but now we are hearing rates of about US$1:ZiG30; but you are going to be hearing of even lower rates. Why? As we go into March, which is QPD, the demand for ZiG is going to be increasing,” he said.
ZiG Holders Set to Gain More Control
He emphasized that this shift would put ZiG holders in a stronger position, allowing them to dictate exchange rates rather than being at the mercy of the market.
We saw it in December; people holding ZiG were being called by their banks to say can we buy your ZiG because there are people holding foreign currency, but when it comes to paying tax, they are supposed to be paying that tax in ZiG, but they don’t have the ZiG. So, the time has now come for the holder of a ZiG balance in a bank to dictate the price, as opposed to what was happening in the past,” Dr Mushayavanhu explained.
Under Zimbabwean law, businesses must pay taxes every quarter, with QPD deadlines set for March 25, June 25, September 25, and December 20 each year.-iharare
