A NIGHT of long knives beckons for banks after Finance minister Mthuli Ncube accused them of driving the parallel market rate up, causing the sharp tumbling of the local currency.
President Emmerson Mnangagwa’s government recently suspended lending by banks among a number of measures, accusing them of funding illegal foreign currency trading and as a result, weakening the local currency.
The suspension has since been lifted.
Amid the panic among banks, whose primary function and source of income traditionally is lending, sources close to the Presidency say Mnangagwa still has a lot more tricks up his sleeve.
While making a presentation in Parliament last week, Ncube pointed a figure at banks for their alleged role in the chaos engulfing the economy.
“The players in the parallel market are numerous. It is not just the ordinary citizens at the street corners. It is also the corporates. It is also banks. I think we know what money changers do — they change money,” Ncube said.
“So, their business is clear but illegal at the same time. Some of the corporates are going into the banking sector to borrow cheaply because of low-interest rates and use those resources to acquire inventory, to store the inventory or to put it on shelves at the higher exchange rate.
“Everytime they do that, then the whole cycle starts all over again. We have a situation where even corporates were pushing up the parallel rate. This is announced by some faceless people that there is a new parallel rate.”
Ncube said some banks were doing that of their own accord, using their own resources, taking positions in the market, adding that there were numerous players trying to make easy money, which made the exchange rate unstable.