Zim dollar eases, SMEs put record bids

The Zimbabwe dollar eased one 25th of a percent against the US dollar, or 3,6 Zimbabwean cents in yesterday’s auction to move to $81,7102 to US$1 from $81,6741 last week, remaining largely range-bound even as small businesses put in a record total of successful bids as they continue to adopt the auction system to become direct importers of their own requirements.

For over two months, the Zimbabwe dollar has been trading a little above $81 to the US dollar and no one is expecting it will return to the highest recorded rate of $83,39 that was set on August 25.

Since that time, the local unit has been fluctuating, albeit mostly strengthening, but by an average of one hundredth of a percent.

The biggest change seen yesterday was the total allotment of more than US$2,3 million to the SME sector, spectacularly breaking the previous record set last week of US$1,84 million.

Bidders on both the main auction and SMEs board continue to tick upwards, pointing to growing confidence by a diversity of business players.

On the main auction, the total number of bidders jumped to 294 from 268 bidders last week, breaking the previous record of 274. Of these 256 bids from the big corporates were successfully allotted a total of US$27,43 million.

Unsuccessful bidders had not completed all required paperwork or wanted to buy items not on the priority lists.

The highest bid on the main auction rose to $90 from $86,3, while the lowest accepted bid remained at $80 and on the SMEs auction, the highest bid increased to $86 from $85 last week, although the lowest successful bid returned to $79 from $80 previously.

Total bids on the SMEs board also spiked to 192 from the previous high of 152 last week, although 17 bidders were unsuccessful.

Total foreign currency allocation was lower at US$29,7 million from US$31 million previously, with the main auction accounting for US$27, 43 million. SMEs, however, took up higher value at US$2,3 million.

The authorities are working to bring more efficiency to the auction system, as some bidders allege processing delays.

Since its inception, the foreign currency auction system has allotted a total of US$466,8 million, with weekly allocations gradually rising from an average of US$15 million to current levels of around US$30 million.

This is despite the central bank remaining the sole supplier of foreign currency on the auction system.

Banks are said to be dealing with their clients outside the auction system, although using the prevailing auction rate.

The productive sectors continue to benefit from the auction system, with latest figures showing that raw materials accounted for the bulk of allotments yesterday at US$11,09 million on the main auction and US$530 608 on the SMEs section.

Machinery and equipment came in second with US$5,6 million on the main and US$578 959 on the SMEs section.

And consumables came in third on the main auction at US$2,09 million; but on the SMEs section, consumables took up US$478 606 as the technical service businesses common in this sector continue to abandon the runners they once used and directly import  instead.