The latest effort has seen the region’s central banks and capital markets regulators tighten forex trading regulations to weed out fraudsters from the lucrative business.
It is argued that illegal forex trading stands to trigger inflation in the region and weaken local currencies, which would make imports expensive and further worsen budget deficits for regional economies.
For instance, in Tanzania, the local currency depreciated by 0.3 per cent between September and October this year and 2.2 per cent on average in the past 10 months, according to data compiled by global advisory firm StratLink.
The Tanzanian shilling closed the month of November at 2,291.7 units against the US dollar, down from 2,281.5 units against the greenback at the beginning of the same month.
Bank of Tanzania carried out a six-month investigation into the illegal business, which revealed rampant fraud the forex market business, with several traders involved in money laundering.
As a result, the banking regulator launched a crackdown on this illegal business by suspending the licensing of new forex bureaus, arresting some key suspects and barring suspect commercial banks from the interbank forex markets.
“All applications have been suspended and new applications won’t be accepted pending the introduction of new rules and regulations,” said BoT Governor Florens Luoga.
Tanzania used the military to seal off suspicious forex bureaus as central bank officials raided the outlets.
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