Depositors, who formed long queues at banks and building societies, were withdrawing new coins and notes yesterday after the Reserve Bank of Zimbabwe (RBZ) released the first $30 million on Monday, but most banks had run out of cash by midday.
Most banks limited withdrawals to between $50 and 100, while a few allowed the full $300 weekly ration.
Even with the modest withdrawals, premiums charged by dealers selling cash for mobile transfers started falling yesterday as cash supply rose and market demand fell.
Premiums were 25 percent for coins and 30 percent for notes.
Measures by the RBZ can stop cheating by banks, but cannot stop those withdrawing their small sums from doing pretty much what they like with the notes and coins they withdraw.
And some sell these.
Cash barons at Mbare Musika and other places were starting to trade in the new $2 coins and $2 and $5 notes by afternoon yesterday.
Some were buying from the full-time queuers, people who queue early every day, sometimes sleeping on the pavement outside a bank, and earn their living from withdrawing cash that they sell for a premium.
In many cases, those withdrawing cash from a bank wanted to spend it quickly with vendors or tuckshops that offer lower prices for cash transactions.
These traders often sell at cost to attract customers and then sell the cash they receive to make their profits.
Well-organised systems have arisen that get cash from vendors to cash barons quickly and these appeared to be coping with the new notes yesterday.
Supermarkets and other retailers who follow the law and charge the same prices regardless of payment method had insignificant numbers of customers using cash.
This would imply that the new cash will largely join the old bond notes and coins in the informal sector until the premium for cash vanishes.
The premium is a little higher than the percentage discount tuckshops in effect offer and the gap between black market exchange rates for cash or mobile money.
That modest extra on the premium covers the dealers’ profit as they have to buy cash before they sell it, and so have their own margin.
Steps taken by the RBZ were likely to stop suitcases of cash being moved from banks to cash or forex dealers, but could not stop the small withdrawals by individuals being accumulated by dealers.
Long queues characterised most banking halls as depositors stampeded to access the new notes and coins.
All banks in Harare’s central business district (CBD) were dispensing cash yesterday morning.
At Eastgate Mall, NMB Bank depositors withdrew $100 per person and $200 for companies, while Steward Bank will allow withdrawals from early morning today.
CBZ Bank Kwame Nkrumah and First Street branches allowed withdrawals of $100 per head, amid long queues, which grew as the day progressed.
Zimbabwe’s largest bank allowed customers to withdraw cash from Automated Teller Machines (ATMs) too.
Standard Chartered allowed withdrawals of up to $300 per individual, while ZB bank permitted $100 in the morning before it ran out of cash later in the day.
At CABS, the withdrawal range stretched between $50 to $100 with those possessing the textacash card getting $50 and those with the blue accounts receiving $100.
RBZ governor Dr John Mangudya said yesterday that the central bank will continue to drip-feed the market with notes and coins until the state of equilibrium is reached.
The central bank intends to increase the amount of cash in circulation to about 10 percent of total money supply, which translates to roughly $1,9 billion.
“We said that we will do it on a gradual basis, number one,” he said. “Number two, when a bank runs short of money what it means is that they should come to us the Reserve Bank, contact our bank operations to ask for more money.
“You should look at a bank like an individual (in need of cash). If you run short of money you go to the ATM to withdraw more; that is true with banks as well. When the banks run short of money they come to us.
“The banks do not also know their exact demand yet because they have been short of cash to give their customers for a long period of time; so to quantify the demand is difficult for the banks for now.”
Dr Mangudya said the process of injecting additional cash went smoothly on the first day, but the RBZ will continue to top up banks with cash to meet demand, but in line with individual banks’ limits.
The central bank chief said the RBZ could stop cheating by banks and would strictly monitor compliance with bank use and promotion regulations to thwart and eliminate misconduct.
He said the RBZ keeps records of all the cash it disburses to banks and would be able to know the culprit if one releases stashes of cash irregularly.
The Herald visited cash barons plying their currency trading activities at Mbare Musika and found that the new notes had already found their way on to the black market.
However, high premiums of up to 50 percent which cash traders used to charge the desperate cash seekers had declined significantly to 30 percent.
Abel Muringani, a cash baron in Mbare, said premiums being charged for cash had significantly dropped and people were no longer frequenting them for cash, something he attributed to the arrival of the new notes.
“The premiums we used to charge a few days ago and the premiums we are charging now are totally different because the cash rates have taken a nose dive,” he said.
“We used to charge 60 percent, but now they have dropped to 30 percent and it’s killing our business because people don’t come to us for cash as much as they used to anymore because they are expecting cash to be there in banks.”
Following the release of cash by RBZ, ordinary people on the streets implored authorities to maintain constant supply of money to eliminate the sale of cash.