Government says willing buyer-willing seller for forex, but it’s more like lucky buyer-reluctant seller


The Zimbabwean government has made it clear that ZW$ is here to stay. Yes, they know the local currency is in freefall, but they believe they can turn things around. When trying to do this, it looks like they’re throwing everything against the wall to see what sticks.

Although we all know that the ZS$ is rapidly losing its value, not all of us agree on its real value today.

The government has insisted that the RBZ auction rate is the precise measure of the value of the local currency. It is worth US$1 at ZW$173 as I write this.

Most analysts criticized the closed auction for not being representative of real market sentiment.

The black market rate states that US$1 equals ZW$410. The disparity with the bid rate indicates that one of the rates is extremely off.

The government seeks to solve this exchange rate problem and its solution is to liberalize the formal exchange rate. So I guess that’s their way of admitting the auction isn’t open.

Willing Buyer Willing Seller

An interesting new measure is the willing buyer willing seller directive. On April 4, 2022, the RBZ announced that:

Further liberalize the foreign exchange market by allowing banks to engage in foreign exchange transactions up to USD 1,000 under an agreed agreement between the banks and the Bank whereby individuals with free funds and entities /companies holding foreign currency in their foreign currency accounts (after meeting legal redemption requirements) will be free to sell foreign currency to banks on a willing buyer and willing seller basis.


Apparently this arrangement was moderately successful and the President announced that the limit was revised to $5,000 per day and $10,000 per week.

Sounds positive, a real free market, just like the black market, but through official channels.

The president says that this willing buyer, willing seller exchange rate is the one that will be used for price discovery in the economy.

Don’t sing the praises just yet, a closer look reveals that all is not as it seems.

Consenting buyer

As of this writing, the interbank rate sits comfortably between the black market and auction rates at 1:280.

It’s a puzzle. If the interbank market is open, why aren’t people flocking to the banks to buy dollars? Why would people pay ZW410 for a dollar on the street if they can buy one for ZW280 from the banks?

What you would expect to see is people bidding on the interbank exchange, pushing the price up until it matches the black market rate.

Of course, this activity could in itself lower the black market rate. Each person who obtains their USD from a bank would represent one less buyer on the black market. Less demand = lower price.

Thus, the fact that this is not happening shows that the buyer is willing but unable to act on this will. We begin to envy those who are able to buy USD at 1:280. Who are these lucky people able to buy at this price?

You can only get USD from banks for “good faith” payments, as prescribed by the RBZ priority list. Ah, here’s the catch we were looking for.

The average person can’t just walk into a bank and ask to buy US dollars. You may have tried and been told that the bank has no USD to sell you.

So who is buying?

A bank told me:

Please note that anyone can buy, but it depends on the availability of funds.

I then asked if all that was stopping me from picking up USD at 1:280 was the availability of funds. Came the answer I was waiting for,

Please note that it is based on the willing seller and it also depends on what you want to use the USD for.

I noted it kindly. You need to tick some boxes to buy from banks. The RBZ clarified who can buy.

I. Buyers who need to make external/foreign payments. These are mainly import companies.

ii. Individuals can access USD for education, medical expenses, and importing goods and services.

Banks will need to see invoices and statements confirming the amount to be paid. And they will make the payment directly to the supplier.

It takes me back to my teenage years when my mom demanded to see the bills before releasing a single dollar.

The government is working on the idea that we pay or should pay for everything else using ZW$. They ignore that the 2 biggest drivers of USD demand for the average person are rent and value preservation.

The government argues that landlords should charge in ZW$, but they don’t. Homeowners, like everyone else, seek to preserve the value of their meager savings.

The government doesn’t consider our need to preserve value because it thinks it can make ZW$ even better, restoring its value-preserving properties.

The above restrictions then mean that most Zimbabweans will never get the required USD from banks.

Thus, the demand that banks see is only a fraction of the actual demand in the market. This means that the parallel market will remain dynamic and the interbank rate will never reflect the true market value of ZW$.

Willing seller?

Who would sell their hard-earned dollars at 1:280 to the banks when they can get ZW$420 for a dollar on the black market? Someone who has no choice, who is it.

The RBZ made that clear.

…foreign currency holders with funds in their FCA accounts are only allowed to sell their foreign currency to the bank that maintains their account. For companies, the amount to be sold… is net of statutory deductions such as the buy-back requirement on export earnings and domestic sales.


As if you needed more reasons not to cash in your USD. If your USD ever arrives in a bank account, you will only be able to exchange them for ZW$ using a low rate.

If you decide to spend the USD electronically, you always lose. The government raised the tax on domestic currency transactions to 4%, from 2% on local currency payments.

So you cannot change currencies or spend forex electronically. Thinking you’re smart, you decide to beat the system and just withdraw the money and then spend it in cash.

The government saw you coming a mile away. They increased the withdrawal fee from 5 cents to 2% per transaction. But wait, that’s equivalent to the local currency transaction tax. So yeah, someone didn’t think about it.

All of these measures are aimed at discouraging currency withdrawals and promoting the use of ZW$. As it stands, they only work to make sure we never deposit our forex. Also to immediately withdraw all funds from our accounts as it only costs 2% as opposed to electronic transactions which cost 4%.

The real sellers

Individuals can avoid the system, but businesses cannot. At least not completely.

Any exporting company must liquidate part of its earnings in foreign currency at the interbank rate. The same goes for sales of national currencies. Large companies simply deposit their receipts and then exchange them for ZW$ at the interbank rate.

If these companies had what they wanted, they wouldn’t sell a single penny at the interbank rate, so calling them willing sellers is like salt to a wound.

The government forces them to sell their dollars at less than the real market rate and then calls them willing sellers. Governments are gangsters like that and there’s nothing you can do about it.

Before you say it’s just because these big companies are able to buy USD at the auction rate, remember that they don’t get all the USD they need from there.

Lucky buyers and reluctant sellers

This system is just as flawed as the forex auction system. It’s not a real market because the government decides who can play. This means that this system is fertile ground for corruption.

Banks have the power to choose who gets the cheap USD. Even if you manage to get the required documents to be able to buy the USD at a discount, you still have to get around the “availability of funds” hurdle.

Banks report that since the introduction of the lucky buyer-involuntary seller system, they have bought more currencies than they have sold. Not a single soul in Zimbabwe is surprised.

It’s not even ideal for banks to be fair. When trading forex, the most important parameters are spread and volume.

A trader buying at 100 and selling at 120 is in the same position as buying at 740 and selling at 760. The difference between the buy price and the sell price, the spread, is what is important.

Then the volume is affected by the price. So, although the spread is the same in the example above, if it is the same product, our trader would prefer to trade at lower prices.

This means that banks would prefer to push massive volumes but are unable to as the government severely limits the number of buyers and sellers only trade the absolute minimum that gets them out of trouble.

After all this, you realize that Willing Buyer is a scam. It’s a system that benefits only a few and is hated by almost all players. So, unfortunately, the real market remains the parallel market.

You should also read:

RBZ on the suspension of bank loans. Partially drawn loans are also suspended. What is the rationale for these decisions?

With the suspension of loans, banks will be fine, but microfinance institutions may struggle

RBZ finally identifies real cause of Zimdollar collapse but sticks to old metrics

Fast NetOne, Econet and Telecel airtime recharge


About Author

Comments are closed.