Forex Currency As Payment

The residents of Beitbridge, Zimbabwe, seem to be taking the current Forex frenzy a bit too far, jumping on the foreign currency exchange bandwagon with gusto. Instead of requesting payment for services and products in the Zimbabwean dollar, the currency of the country, they are opting for payment in the South African rand instead. The rand is returning so much more on the Zimbabwean dollar, a sign of ‘galloping inflation’ in the country, that people are cashing in on simply to make ends meet. The border town’s merchants have all been switching currency, some of them with very good reason.

According to an employee in one of Beitbridge’s supermarkets, the prices of goods that are being imported to the town from South Africa are rising. “You will realise that most of our goods are imported from South Africa and therefore you will find that of late we have been increasing the prices almost everyday. This is largely because we would be racing against the prevailing exchange rate to enable ourselves to purchase more supplies,” said the employee.

Flea markets and traders have also started trading in foreign currency to keep their prices at a reasonable level. One example that has been given is the price of a pair of trousers at a flea market. In rand, they are going for 150 to 250 while at the retail clothing stores they are selling for $3 to $5 trillion Zimbabwe dollars.

Even landlord are starting to charge their tenants rent in foreign currency, which has forced many people to move out of their lodgings or be evicted because they could not pay the rent in the new rate. People in high-density suburbs are paying R300 per room while low-density suburbs are paying between R600 and R1000 per room.

“In essence, it seems the use of foreign currency in Beitbridge whenever conducting any business has been legalised and right now you will note that some landlords who only recently feared arrest for charging rent in foreign currency are now openly boasting about it and are not being arrested for that matter. I feel something has to be done before the situation totally gets out of control,” complained Ms Teldah Sigogo, a resident of Dulibadzimu where the rent situation is spiralling out of control.

Technically, the residents of Beitbridge are breaking the law and could be forced to serve jail time for charging foreign currency rates for goods and services. It is an illegal practice under Zimbabwean law. It is understandable, however, why this is happening as the inflation rates continue to rise. Business owners have no other option besides simply closing up shop, and that would only lead to further decline in the economy.