HomeBusinessGolden leaf fails to deliver forex

Golden leaf fails to deliver forex


IH Securities says the economy is yet to feel the impact of the tobacco export proceeds despite being over 90 days into the season.


In IH Securities outlook for the month released recently, the local financial markets firm said there is pressure on cash premiums which have surged on the back of a higher demand for forex.

“Higher demand for forex translated across to the parallel exchange market as pressure mounted on premiums which have surged with no visible catalyst to suggest an improvement in the short term. The economy is yet to feel the impact of forex liquidity from tobacco export proceeds despite being over 90 days into the tobacco marketing season,” IH Securities said.

This comes as banks and monetary authorities have been banking on tobacco proceeds to quell cash shortages which have only worsened since the start of the tobacco selling season in March.

In the Tobacco Industry Marketing Board (TIMB) report ending July 6, tobacco sales of $652 168 345 was recorded year to date from 223 535 547 kilograms sold.

Despite these sales being a 32% change from the tobacco sales recorded over the same time last year when 168 492 810 kilograms of tobacco was sold for $494 983 006, liquidity challenges still persist.

This has rendered export proceeds from top markets such as China, South Africa, Belgium, Indonesia, and the United Arab Emirates negligent in addressing cash shortages.

TIMB chairperson Monica Chinamasa said while she was not the central bank and could ascertain what was happening with forex from tobacco, the problem could be due to the RBZ prioritizing fuel.

“We know part of it goes towards the purchasing of fuel. If anything what we bring in is more or less equal to what the country needs in terms of the purchase of fuel. So most likely that is where it is going because that to me is also priority. I hope you get my point that the governor (Reserve Bank of Zimbabwe governor John Mangudya) has to prioritise how he is going to use that forex which is coming in and the demand is very heavy on fuel,” she said.

“If you look at the number of cars on the road, you can see where the money is going. Once cars are not moving, than we worry where the funds are going, but as long as we are travelling on the road, it means forex is getting there. It is a complex situation. I feel that we are partly to blame. We are hoarding money, if you search these homes and people, you would be surprised where the money is.”

She said people were just hoarding money whenever they get a bit of money to save. “Yes, understandably, but then it dries up the market,” Chinamasa said.

Bankers Association of Zimbabwe announced last week that it was debating whether to continue importing cash since the money was not coming back to the banks.

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