FRESH evidence of manipulation of the free-falling domestic currency emerged this week, with the Reserve Bank of Zimbabwe (RBZ) promising to launch an extensive probe into petroleum firms suspected of forex parallel market deals.

Millions of United States dollars are said to be exchanging hands between black market dealers and oil firms that have capitalised on market shortages to spin their foreign currency earnings before channelling them back to fuel imports.

The practice is said to have increased after the foreign currency auction system started struggling to release funds allotted to companies on the platform.

Zimbabwe industries, which require about US$40 million per week for their import requirements, have been forced to look for foreign currency on the black market, triggering rocketing demand that has attracted petroleum firms, whose liquidity has been boosted by the government's decision last year that they can trade in foreign currency.

RBZ governor John Mangudya confirmed that monetary authorities will investigate the oil companies.

“That is why we are saying that arbitrage has now become an industry in Zimbabwe,” Mangudya told the Zimbabwe Independent.

“That is what you call rent-seeking behaviour. People try to undermine policies to create a profit called ‘arbitrage’.

“In a normal economy, and under normal circumstances, third party transactions are not permissible because they are the hive of money laundering throughout the whole world.

“That is why third-party transactions are not allowed. You need to buy them (goods) using your ID and your card so that we know who has purchased the goods.

“We are going to intensify that area. Even bankers themselves should also manage these accounts because if they see that someone is swiping 10 or 20 times in OK or TM, for example, that is called a suspicious transaction. So, banks need to report those suspicious transactions because they see them every day,” he added.

Energy and Power Development permanent secretary Gloria Magombo said: “As a ministry we condemn such practices. I have advised the Zimbabwe Energy Regulatory Authority to investigate this and will also advise RBZ”.

Investigations by the Independent indicated that cash dealers have been using fuel stations to swipe for fuel in exchange for foreign currency.

What happens is when selling amounts of US$1 000 and over, cash dealers will take their client’s bank card to a fuel station where the attendant will usually be an accomplice.

Upon arriving, the fuel attendant will wait for motorists, including bulk buyers, who want to use United States dollars to purchase the fuel.

But, instead of receipting in US dollars, the fuel attendant will use the cash dealer’s client’s bank card to swipe for the fuel.

Then the fuel attendant gives the cash dealer the US dollar equivalent for the transaction.

The practice is apparently occurring at fuel stations that still offer Zimbabwean dollar pricing along with the greenback.

ZUVA CEO Bethwell Gumbo said he was not aware of such malpractices.

“If you were coming to my service station, as an example, then I would say you can buy using US$1 or ZW$84, if I had these two prices, it would make sense for my attendants to sell everything in US dollars and ask someone to swipe . . . and give me Zimbabwean dollars because I would not know which customer came and bought with what,” he said.

Insiders said oil firms were generating big amounts through black market trade in foreign currency.

Government has already threatened to suspend and punish several oil firms named in a “comprehensive” list of companies abusing foreign currency obtained from the RBZ.

This was after petroleum firms accessing cheap foreign currency at the auction system started selling the product legally in United States dollars.

But, under a strategy that came into force since the introduction of the foreign currency auction system in 2020, petroleum firms accessing forex from the RBZ are compelled to sell in Zimbabwean dollars.

However, consumers have claimed that they have been short-changed.

Last week, the Zimbabwe Republic Police (ZRP) confirmed rounding up a string of directors of financial institutions alleged to be behind an extensive decimation of the domestic currency.

The Financial Intelligence Unit (FIU) and the Zimbabwe Revenue Authority are also involved in the probe.

The practice being investigated by the RBZ is said to be rampant across sectors including supermarkets and other businesses.

The central bank chief said it was difficult to ascertain the value of funds involved in the fuel scam as it was still a new phenomenon.

A recent RBZ paper said major corporates were fleecing the country of meagre foreign exchange reserves by tendering fake bills of entry to the foreign currency auction system to access cheap funds, which they channelled to the parallel market.

The document reveals details of how big exporters with easy access to the foreign currency auction system have been bidding on behalf of third parties to circumvent the system.

The RBZ says significant numbers of bids have been inflated, while the big exporters have been creating artificial demand on the auction system by dabbling in related party deals.

The high-level delinquency could explain why the under-fire forex auction system has struggled to fund allotted amounts, accumulating backlogs of up to two months.

At one point, companies said they were owed up to US$200 million in funds allocated at the auction system, a platform that has been credited for saving hundreds of companies from collapse since its launch in June last year.