US embassy cable - 04HARARE1361

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Identifier:	04HARARE1361
Wikileaks:	View 04HARARE1361 at Wikileaks.org
Origin:	Embassy Harare
Created:	2004-08-13 04:59:00
Classification:	UNCLASSIFIED
Tags:	ECON ETRD EINV PGOV ZI Economic Situation
Redacted:	This cable was not redacted by Wikileaks.

UNCLAS HARARE 001361 
 
SIPDIS 
 
STATE FOR AF/S 
USDOC FOR AMANDA HILLIGAS 
TREASURY FOR OREN WYCHE-SHAW 
PASS USTR FLORIZELLE LISER 
STATE PASS USAID FOR MARJORIE COPSON 
 
E. O. 12958: N/A 
TAGS: ECON, ETRD, EINV, PGOV, ZI, Economic Situation 
SUBJECT: Zimbabweans evade official exchange rate 
 
1. Summary:  The Reserve Bank (RBZ) is playing cat-and- 
mouse with parallel traders.  Since prohibiting payouts 
for remittances in foreign exchange, business is 
migrating to Zambia.  End summary. 
 
75 Percent Drop in Western Union Transfers 
------------------------------------------ 
2. The RBZ decreed July 28 that transfer agencies such as 
Western Union could no longer make payments in foreign 
exchange and must convert incoming funds at the official 
(auction) rate.  Since then, weekly remittances handled 
by Western Union of Zimbabwe have fallen precipitously 
from US$2 million to 500,000.  Western Union's local 
director told us his branches are still receiving smaller 
amounts from abroad.  However, customers are now routing 
larger quantities (over US$1,000) through branches in 
Zambia.  Zimbabweans apparently travel across the border 
to receive the funds and exchange them at parallel rates. 
 
Comment 
------- 
3. The RBZ remains more committed than ever to 
overvaluing the zimdollar and dampening the parallel 
market.  As the speedy 75 percent drop in Western Union 
business demonstrates, however, Zimbabweans are equally 
committed to getting fair value for forex.  In the end, 
the GOZ may realize it underestimated the resourcefulness 
of its population. 
 
Sullivan