The major reasons why Zimbabwe suffers from foreign currency shortages can be traced back to a lack of confidence (trust) in financial institutions, especially the country's apex bank, repressive exchange control regulations and an inefficient foreign exchange market that does not give fair value to buyers and sellers.
However, these countries do not experience acute foreign currency shortages because they have efficient foreign exchange markets that provide liquidity in the economy and afford their local currencies some form of stability.
If the foreign exchange market were efficient and there was confidence, diasporans would use formal channels to send money back home while recipients would simply exchange the foreign currency for Zimbabwean dollars through the same banking channels.
An inefficient foreign exchange market is costing Zimbabwe billions of dollars that would ordinarily be channeled via the formal financial sector by various economic players such as remittance receivers (households), labour, exporters, non-governmental organisations and multinational corporations.
An inefficient foreign exchange market cannot work in a market where the central bank seizes exporters' earnings, let alone using a fixed interbank rate.
