Business Reporter
THE Reserve Bank of Zimbabwe (RBZ) Foreign Exchange Auction injected US$382, 9 million into the economy during the year’s first seven months, going a long way to bolster local companies’ productivity and economic growth.
The Mid-Term Monetary Policy Statement (MPS) published this week shows considerable impact was exerted by the platform.
“During the first seven months of 2023, the Bank allotted a total of US$382,93 million through the Retail Auction System, representing 69.45% of total bids submitted. From inception in June 2020, the Auction System, a total of US$4,09 billion has been allotted, representing 85% of the total bids submitted,” RBZ governor John Mangudya said.
The MPS said with effect from 13 June 2023, the Main and SME Auctions were merged into one Retail Auction with a maximum amount of US$5 million per week.
The minimum bid for the Retail Auction is US$1,500 and the maximum is US$50,000.
“On 7 June 2023, the Bank further liberalised the foreign exchange market and introduced the Wholesale Foreign Exchange Auction in a bid to strengthen the interbank foreign exchange market under the Willing-Buyer Willing-Seller (WBWS) arrangement.
“Under this arrangement, the Bank auctions foreign exchange to Authorised Dealers at market-determined exchange rates for them to onward sell to their customers,” said the MPS.
The document also revealed that since inception, the Bank has held 12 wholesale auctions, with banks submitting bids of around 32% of the amount on offer, largely due to the tight local currency liquidity conditions prevailing in the market.
The Bank has allotted US$95,85 million under the Wholesale Foreign Exchange Auction, representing 91% of the total bids submitted.
“On average 12 bids were received per auction, with bids that were way below the market rates, not allotted as they presented arbitrage threats.
“The Wholesale Foreign Exchange Auction System has strengthened the interbank foreign exchange market under the Willing-Buyer Willing-Seller (WBWS) and remained central to the determination of the market exchange rate,” added Mangudya.
