By Alois Vinga
RESERVE Bank of Zimbabwe’s (RBZ) foreign exchange auction system this week went against volatility headwinds, allotting US$36 million with the objective to spur productivity amid calls for wealthy corporates to exercise responsibility through engagement for sustained stability.
A trading update released at the close of business Tuesday shows that a total of 1 775 bids were submitted on both the Main and SME auction platforms indicating an increase in demand for the greenback.
On the Main Auction platform, raw materials received US$11 million, machinery and equipment US$7, 8 million, consumables US$3 million, services US$980 656, retail US$3,2 million among others.
A total of US$28, 3 million was allotted on the main auction platform.
On the SME Auction raw materials were allotted US$2,4 million, machinery and equipment US$2,4 million, consumables US$1,2 million, and services US$608 013 resulting in a total of US$7,9 million being allotted on the platform.
The official exchange rate weakened slightly after the Zim- dollar moved from the US$1:$85 recorded last week to US$1: $90.
Analysing the outcome, economist Persistence Gwanyanya hailed the depreciation of the exchange rate saying it signifies swift responses to the commitment made by the central bank this week.
“The movement of the rate brings a measure of confidence in yesterday’s process indicative of streamlining and strengthening the auction system by eliminating surrogates.
“The banks committed to uphold Know Your Customer requirements and we hope that the past errant practices where large corporates were funding small companies’ bids will be a thing of the past,” he said.
He urged auction stakeholders to exercise responsibility underscoring the sensitive nature of the economy which easily responds to even non-economic market dynamics.
“ If stakeholders are honest and true to their expressed commitment we will see a return in stability. The central bank cannot achieve this alone considering that more than half of the total deposits both in local currency and US$ Nostro are in the hands of just 50 individuals and corporates and they have the power to speculatively push up parallel market rates.
“What this means is that the economy has structural weaknesses which can only be addressed through constructive dialogue and responsibility on the part of other stakeholders,” added Gwanyanya.