Zim-Dollar Continues to Strengthen Against Greenback On RBZ Auction

The Zimbabwe dollar continues to strengthen for the third time in successive weeks against the United States dollar amid sustained exchange rate stability, closing Tuesday’s Reserve Bank of Zimbabwe (RBZ) foreign exchange auction at ZWL$81.70 from last week’s ZWL$82.70.

The local currency first gained against the US dollar two weeks ago.

This follows the inception of the auction system in June this year.

It has been going down from ZWL$83.32 recorded two weeks ago.

An update released by the RBZ at the close of its 13th auction trading shows that the main foreign exchange auction was allotted US$20 million out of a total 164 accepted bids after 10 more bids were disqualified for violating the set regulations.

The highest bid rate reached ZWL$88 and a low of ZWL$75 with allocations being allotted towards raw materials which received US$8.5 million, machinery and equipment US$3.1 million and consumables US$1.3 million.

Services were allotted US$1.3 million, retail and distribution US$1.5 million, fuel electricity and gas US$1.2 million, Pharmaceuticals US$1.2 million and Paper and packaging US$938 000.

On the Small to Medium Enterprises auction, a total of 96 bids were received and 12 were disqualified.

The total value of bids accepted were US$1.1 million with exchange rates reaching a high of ZWL$86.50 and a low of ZWL$75.

Raw materials were allotted US$216 00, machinery and equipment 218 345, consumables US$291 322 and services US$148 175 with retail and distribution US$67 557.

Market watchers believe that the recent stabilisation of the exchange rate has positively impacted production with industry executives saying access to forex has improved while previous price increases have since halted.

Parallel market activities have also eased amid enforcement of monetary reforms, which have seen many illegal money changers struggling to meet the market demands.

Currently, parallel market rates are hovering between ZWL$90 and ZWL$95 per every US$1 but most traders are being choked by liquidity challenges and in most cases, they cannot pay for higher amounts.

The strict market regulations applied on platforms such as Ecocash have also seen companies fleeing the parallel market in favour of the RBZ auction.

 

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