Banks fined for black market dealings

Zimbabwe's central bank said on Sunday that it had fined three local commercial banks Z$11 million (US $200,000) for allegedly buying scarce foreign currency on the black market, Reuters reported.

Reserve Bank of Zimbabwe representative Ignatius Mabasa confirmed a story in the state-controlled 'Sunday Mail' newspaper that the three banks had recently been caught violating rules against trading on the informal parallel market, the report said. Mabasa was quoted as saying that the banks had been penalised on 11 counts. He declined to give further details.

A severe foreign currency shortage had forced many traders to buy the few dollars available at an informal parallel market rate of 350 Zimbabwe dollars per US dollar against the formal rate of 55:1, Reuters said. President Robert Mugabe's government had held the Zimbabwe dollar at 55 to the US dollar since November 2000, arguing that a devaluation would not help correct the country's economic woes, it added. However, Zimbabwe, was still struggling with its worst economic crisis since its independence from Britain in 1980.

According to Reuters, political and economic analysts said the government feared that devaluation might work against Mugabe by stoking inflation and angering voters ahead of presidential elections due next April.