Zim dollar plunges 49 percent at the forex auction system

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THE official exchange rate this week plunged 48,9% on the Reserve Bank of Zimbabwe foreign exchange auction, suffering a huge decline since the establishment of the platform.

A trading update released at the close of business Tuesday shows that the official exchange rate fell to US$1: ZW$ 258,54 compared to US$1: ZW$ 258,54 recorded last week.

This was however, still way below the more widely used black market rates which range between ZW$350 and ZW$400 to the Greenback.

Analysing the results, economist Persistence Gwanyanya said the developments are in sync with both the RBZ’s and President Mnangagwa’s policy measures to reach equilibrium and distribute what is available.

“Recently, the central bank committed to allocate the available foreign currency in a bid to ease the accumulation of backlogs which explains the US$6,8 million disbursed amount.

“We also see the official rate depreciating massively indicating the move towards the convergence between the interbank exchange rate while swiftly closing the parallel market rate which currently stands at US$1:ZW$400 ,” he said.

He added that these factors will slowly lead the country towards establishing the market equilibrium required by several market players as well as restoring confidence in the local currency.

Meanwhile, even the total amounts disbursed on the platform this Tuesday recorded a huge decline from the average of US$40 million a month disbursed weekly for most part of the auction’s existence to US$6,8 million.

The RBZ update also shows that allotments were biased in favour of raw materials which received US$3,1 million main auction, machinery and equipment US$1 million, consumables US$199 557, services US$303 837, retail and distribution US$335 266, pharmaceuticals and  chemicals US$50 000, paper and packaging US$531 908.

The platform received a total of US$5,6 million.

On the SMEs Auction, raw materials were allotted US$ 399 298, machinery and equipment US$ 421 176, consumables US$152 356, services US$118 337, Retail and distribution US$82 083, pharmaceuticals US$66 865

The total disbursed on the platform was US$1, 2 million to give a grand total of US$6,8 million. – Newzim