While this is a step in the right direction in terms of price stability, continued depreciation only means that the loss of value experienced since 2016 but more prominently from 2018, has been permanently crystalised.
The next few weeks into September are therefore key with market sentiment projecting a marginal appreciation.
According to the auction results from the Reserve Bank of Zimbabwe, the lowest bid rate was 80 for the main auction and 75 for the SME’s auction while the highest rate was at 88. The difference between the highest and lowest bid is now 10% from a high of over 290% at the start.
A total of US$15.03m was apportioned to both the main auction (US$14.06m) and SMEs (US$0.961m) at the recent auction after a combined 224 bids were accepted from a total 267 bids. This brings the total allotments in the ten weeks from June 23 to US$151.03m against demand of US$171.4m. Industry, exclusive of fuel, requires US$80m monthly for its import requirements.
Raw materials continued to receive the highest allocation after they got US$5.177m as the narrative continues to favour production. Machinery and Equipment was allotted US$4.033m, Consumables received US$1.821m. Pharmaceuticals and Chemicals was the last category to receive over a million with US$1.64m. Retail and distribution, Services and Fuel, Electricity and Gas, were among other sectors to be allotted funds through the auction system today.
The auction system has to date served 87.1% of the formal foreign exchange market demand, according to RBZ governor John Mangudya, which is within the 80-90% global average.
The cash parallel market rate like other parallel market rates has remained stagnant for seven weeks now at 82. The Zipit rate also remained stuck at 105-120 for large amounts. The Hard-Boiled Egg Index is at 105. Mobile money rates were quoted at 95-98 for One Money and 90-96 for Ecocash transactions. Zipit lower amounts is currently at 100. The difference between the standard parallel rate of 100 and weighted average rate is now at 18% from a high of 54% at the start of the auction.