Zimbabwe’s central bank restricts internal bank transfers with spiral inflation

A man poses with Zimbabwe's new two dollar banknotes as customers queue outside a bank in Harare. Photo Courtesy: Reuters
A man poses with Zimbabwe’s new two dollar banknotes as customers queue outside a bank in Harare. Photo Courtesy: Reuters

The Reserve Bank of Zimbabwe (RBZ) has issued a directive that internal bank transfers will be limited to two per day as the apex bank battles to arrest the free fall of the Zimbabwe dollar.

In a letter directed to banks dated June 6, RBZ Financial Intelligence Unit (FIU) acting director-general Oliver Chiperesa said the unit had noted a sharp increase in the abuse of the internal bank transfer facility by illegal foreign currency dealers.

“We have noted a trend where entities are using their bank accounts to buy foreign currency, using a network of runners, some of whom have been advertising their services on social media,” he said.

“These illicit transactions manifest in the form of daily multiple payments from one account to beneficiaries who hold accounts in the same bank,” the official added.

If a customer has the genuine need of conducting more than two transactions in a day by way of internal transfers, the customer can obtain approval from bank management, Chiperesa said.

The Zimbabwe dollar has been in free fall against the U.S. dollar in the last few months and the central bank has accused illegal forex dealers of fueling high inflation through exchange rate distortions.

Earlier this month, RBZ directed all banks to freeze over one hundred bank accounts linked to mobile money agents suspected of involvement in illicit foreign currency trading.

The central bank blames mobile money agents for driving the illegal foreign currency trade, which has driven up the parallel market rate for the Zimbabwe dollar to 1:70 compared to the official interbank rate of 1:25.

Official figures from the Zimbabwe National Statistics Agency show that year-on-year inflation in March 2020 stood at 676 percent.