By Alois Vinga
THE Reserve Bank of Zimbabwe (RBZ) foreign currency auction allocations to industry surpassed US$33 million at the close of trading Tuesday indicating rising stakeholder confidence levels in the market.
Listed companies also confirmed the RBZ platform’s contributions had brought market stability.
A trading update released this week by the RBZ shows a total of US$31.1 million was allotted towards companies’ raw materials and machinery needs among others while a total US$2.1 million was allotted on the small and medium enterprises (SMEs) market.
Combined, a grand total of US$33.347.855 million was allocated to critical industrial needs in a bid to revamp economic productivity.
The auction first reached the peak in September this year after allotting US$31.6 million to industry.
A fortnight ago, the auction reached the second highest figure of US$31.7 million.
The Zimbabwe Stock Exchange (ZSE) listed companies have hailed the system for bringing about sustained stability since its inception in June this year.
Agro-processor Hippo Valley Estates chairperson, Dan Morokane acknowledged the system’s positive impact during the first half of 2020.
“Month-on-month inflation slowed down to 3.83% due to the exchange rate stability experienced since the introduction of the foreign currency auction system,” he said.
“The re-introduction of the multi-currency system and shift to market driven exchange rate has resulted in significant foreign currency liquidity returning to the formal market.”
In a trading update this week, Border Timbers judicial manager, Peter Lewis Bailey said the economic environment has been fairly stabilising since the introduction of the foreign currency auction system and this has seen some improvements in the macro-economic fundamentals.
Mashonaland Holdings company secretary, Batanai Peresuh attributed the obtaining exchange rate stability to the company’s increase from 3% to 79.2% in occupancy levels.
“The introduction of the foreign exchange auction system has improved availability of foreign currency and has seen a 128% depreciation in the exchange rate from the fixed exchange rate of US$1 to $25 to US$1 to $57 as at 30 June 2020,” he said.
The National Merchant Bank of Zimbabwe acknowledged that the system had seen the fixed foreign currency exchange rate regime being abandoned.
Top seed processor, SeedCo said as a result of the auction system the group’s pricing strategy was aligned to ensure the Zimbabwe dollar selling prices track the exchange rate to minimise any value erosion.