Zimdollar strengthens against the real US dollar

The local currency appreciated for the first time against the US dollar after it firmed a marginal 0.094% to 83.3209 from 83.3994.
This followed a drop in both the highest and lowest bids to 87.5 and 76 from 88 and 80 respectively, signaling the tightness of local dollar liquidity and the movement towards US$ trading.

A total of US$16 million was allotted to various sectors of the economy, with the main auction taking US$15.04 million and the SMEs taking US$0.98 million. According to results from the Reserve Bank of Zimbabwe, raw materials were allotted US$6.42 million, Consumables US$1.42 million, Retail and Distribution US$1.05 million, Machinery and Equipment US$3.7 million and Services at US$1.59 million. Other amounts below US$1 million were allotted to Pharmaceuticals and Chemicals, LPG Gas, Paper and Packaging and Fuel and Electricity.

Cumulatively for the 11 weeks, the auction has traded US$166.07 million while OTC trades are averaging between US$25-$30 million. Monetary Policy Committee member Eddie Cross says that the RBZ has held a surplus forex position over the last three auctions and all qualifying bids are being allotted at whatever rate they are bidding.

While the marginal appreciation of the rate was expected as was reported last week, the parallel market rates continue to hold steady while the use of the US$ becomes more engrained. Key to the success of the auction system is how it will trade during the traditional forex drought period from October to February.

The lowest bid rate was at $76 and the highest at $87.5. The difference between the highest and lowest bid continues to narrow as it moved to 15.13% from 17.33% last week. The average weighted rate is now 4.78% lower than the highest bid from 5.23% last week. Parallel market rate and average weighted rate difference increased to 27.55% from 27.48% seven days ago.

Source – finx