RBZ declares US$ available on Auction System a week earlier
By Alois Vinga
THE Reserve Bank of Zimbabwe (RBZ) has moved to shift the Foreign Exchange modus operandi by declaring USDs available for trading one week earlier.
The latest development is in sync with the policy initiatives announced by the government last week directing the Foreign Exchange Auction System further fine-tuning to declare a pre-announced envelope, on a pure Dutch auction basis.
In an update Tuesday, RBZ governor, John Mangudya revealed the amount set for the coming week.
“In line with the refinement of the Foreign Exchange Auction System and the subsequent Exchange Control Circular to authorised dealers (Circular No. 03 of 2023 dated 12 May 2023, the RBZ) would like to advise the public that the amount available for allotment for 23 May 2023 will be US$15 million.
“Going forward the bank will continue to advise the public of the weekly amounts available on offer under the Foreign Exchange Auction System through Authorised dealers,” he said.
Market analysts believe the move will go a long way in stabilising the exchange rates since bidders know well in advance where to peg their bids. If the amount available is higher, bids will be set at a lower range and vice-versa if the amounts available are lower.
The initiative is also expected to minimise the accrual of backlogs as the central bank moves to strictly disburse only what is available.
Meanwhile, an update released at the close of trading on the RBZ Foreign Exchange Auction Tuesday shows that the official exchange rate depreciated to US$1:ZWL 1 404, 80 down from US$1:ZWL 1 202 recorded last week.
A grand total of US$14,4 million was allotted on both the Main and SMEs Auction platforms with raw materials, machinery and equipment needs receiving the highest amounts in line with the objective of stimulating productivity.
Economist Persistence Gwanyanya said the developments are in line with incorporating measures announced by the government last week.
“The official exchange rate has started to gravitate towards the parallel market premiums amid expectations that the gaps created in past weeks will be closed soon.
“The fine-tuning of the Auction market will further bolster confidence realising that the pressures of supporting government’s debt which have since been taken over by treasury will leave enough resources to support the companies foreign currency needs and reduce pressures on the parallel market,” he said.
He added that as the RBZ moves to allocate only what is available; an opportunity to clear all backlogs will be seized therefore contributing towards the strengthening of the Auction system.