John Rwangombwa, the Governor of the National Bank of Rwanda, has issued a warning about the widespread forex trade malpractices that are affecting the country’s economy, leading to a shortage of foreign exchanges.
The call was made during a joint press conference of the Monetary Policy Committee and Financial Stability Committee on November 23.
The conference shed light on recent suspensions and penalties imposed on several forex bureaus, signaling a decisive crackdown on deliberate withholding of the US dollar.
Rwangombwa stressed that a total of 16 forex bureaus were impacted by the recent regulatory actions, marking a significant warning against those engaging in illicit activities within the forex market.
He said: “We took punitive measures on these forex bureaus because of the malpractices in the market. Some were holding forex, you enter they tell you they don’t have forex, somebody else comes in they have forex.”
“According to the regulations we have, we suspended them for three months, others were penalised between Rwf350,000 to 500,000, depending on the offence and we continue following up on what’s happening,” he noted.
Rwangombwa highlighted that “those who had malpractices, were taking advantage of the pressures on the market today and they wanted to make super novel profit.”
“Furthermore, we also require them to have CCTV cameras in their business premises so we are able to track what they are doing and their actions including tracing these malpractices.”
“It’s our responsibility to ensure market conduct is according to existing regulations,” he said.
The conference also addressed concerns regarding the impact of suspensions, whether it has affected the velocity of the supply on the market or not, and if it has helped in regulating depreciation concerns.
Addressing the concerns, he said, “Taking actions against these forex bureaus wasn’t really about generating more US dollars, but behaviours and the perceptions they are creating in the market of shortage beyond the actual status was the one that was eliminated.”
“Especially, when you look at the daily depreciation that we had before and the one reduced after the actions were taken,” he added. “We intended to create order in the market.”
“What is happening is the demand and supply forces that are determining the price of the forex and that is what is supposed to be done. We don’t dictate the pricing of the forex but we monitor, and they are required to report to us the pricing at which they are transacting because some of them were sending us information that they sell at a certain amount yet not.”