Business Reporter
THE ZW$ recovered for the third time on the Reserve Bank of Zimbabwe (RBZ) Foreign Exchange Auction this week , firming up by 5,9% against the greenback.
A trading update published by the central bank at the close of business Tuesday shows that the exchange rate reached US$1: ZW$5 395 up from the rate of US$1: ZW$5 739 recorded last week, achieving a 5,9% recovery.
This follows the recovery of 8,6% on the record last week on the official market and a further 10,2% recovery after a second Auction was held last week.
Market watchers have attributed the current trend to rapid depletion of ZW$ usable bank balances following the move by authorities to widen the usage of the local currency.
To this end, tax payments which were normally paid in US$ are now payable in the ZW$ over and above the requirement for all the government departments and agencies to charge their fees and levies exclusively in local currency.
Other measures include 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 trading update also shows that on the Wholesale Auction platform – where large corporates normally buy US$, the number of bids received were 11, with a total value of bids accepted US$4,1 million.
However, the amount allotted for the platform was US$20 million which the platform could not entirely take up due to low ZW$ balances.
During the day, bidding rates reached a high of ZW$5 500 and a low of ZW$ 5 200.
On the Retail Auction platform, a total US$580 921, 00 was allotted with productivity related needs such as raw materials receiving US$205 209, Machinery and Equipment US$64 869, services US$183 004, Retail and Distribution US$127 837 among others.
In analyzing the latest developments, economist Persistence Gwanyanya said;
1) The trend continues; a) Out of the US$20m offered to the wholesale Auction mkt, only US$4.127m was allotted reflecting tight ZW$ liquidity
b) Due to tight ZW$ liquidity, the ZW$ continues to strengthen.
2) We expect the parallel mkt to follow the same trend.
3) It appears the Policy makers are determined to defend ZW$ stability
4) Not only are they determined, but they have the required reserves to do so
5) Strengthening ZW$ is becoming the new norm
