ZW$ recovers against the greenback on the RBZ Auction, exchange rate down to US$1:ZW$6 326

Business Reporter

THE ZW$ recorded a significant recover on the Reserve Bank of Zimbabwe (RBZ) Foreign Exchange market to close the day at a premium of US$1: ZW$6326.

The unexpected result comes after the local currency suffered huge depreciation in the previous months .

But despite expectations that the local currency would continue on a downward spiral, a trading update published at the close of business Tuesday shows that  since the inception of the Auction system, the local currency gained value from the rate of US$1: ZW$1 926,57 reached last week.

The figure translates to a gain of 9% against the greenback , a development which market watchers believe to be a signal for easing demand for the greenback.

The central bank revealed that a total US$30 million was on offer, but the banks just managed to take US$10 million due to local currency shortages.

Experts believe the recent measures employed by the Treasury are swiftly exerting positive market responses with improved usage locally as opposed to the past where companies and individuals were forced to exchange it for the greenback.

To this end, the local currency is now the acceptable tender in the payment of most taxes on the back of  a commitment to fund  25% export surrender requirement, maintaining US$ cash withdrawal tax at 2%, adoption of all external loans by RBZ and increasing consumers’ access to basic commodities – by lifting import restrictions on basic goods.

 The Dutch Foreign Currency Auction was also liberated further by allowing the market to determine the exchange rates through the Willing Buyer Willing Seller (WBWS) system where banks receive foreign currency from the central bank at a wholesale floor price for onward selling to their clients.

In comparison, the parallel market dealers are struggling to pay premiums pegged by the official market with US$1:6 000 being the highest rate for those disposing of the greenback.