THE ZW$ firmed up by 2, 29% on the Reserve Bank of Zimbabwe (RBZ) Auction with US$ uptake increasing significantly amid expectations that the retail sector will begin to lower prices.
A report released at the close of trading Tuesday shows the official rate reached US$1: ZW$4 771 to record a 2, 29% increase from the rate of US$1: ZW$4 883 recorded last week.
Traders are therefore allowed to charge 10% above the official market rate of US$1: ZW$5 368.
The developments also come at a time when the ZW$ has significantly recovered on the parallel market which was trading at around US$1: ZW$5 500 just before the latest official rates.
The local currency has steadily recovered in recent weeks in response to a raft of measures employed by both fiscal and monetary authorities in a bid to ease inflationary pressures from spiraling beyond control.
Such initiatives have seen the widespread usage of ZW$ in the payment of government fees and taxes prompting the increased demand for the local currency.
During the day, trading on the Wholesale Auction platform where corporates are now sourcing for foreign currency via banks saw a total of 15 bids accepted.
Despite US$20 million being on offer, just US$11,5 million was taken up signifying constrained ZW$ access in the market.
However, the amount taken up by Wholesale platform is quite a significant increase from the amount of US$5 million which the same market has been purchasing in the recent past weeks.
On the Retail platform, a total US$542 480 was allotted with raw materials alongside other productivity-related needs were supported.
Economic Analyst, Persistence Gwanyanya said if the ZW$ recovery trend persists, prices will also follow suit as traders will be left with no choice.
“In the adjustment period, some companies may remain skeptical and scared of adjusting prices due to uncertainties attached to the developments. In the long term holding on to higher prices simply means that one is outcompeting products or services on offer.
“The quantum of the amounts taken up by the bidders is also reflective of the tight liquidity position in the markets,” he said.
