By Alois Vinga
THE RESERVE Bank of Zimbabwe (RBZ) Foreign Exchange Auction Tuesday closed trading at a rate of ZWL$83.32, which was seven cents lower than last week’s premium against the US dollar.
A trading update released at the close of business showed that the officially accepted exchange rate was ZWL$83.32, down from ZWL$83.39 arrived at last week.
The official rate has been increasing steadily from the ZWL$82.91 recorded a fortnight ago.
The main auction was allotted a total of US$15 million with the highest bidding rate reaching ZWL$87.50 while the least rate hit a low of ZWL$76.
A total 154 bids were received and 25 were disqualified for violating fundamental rules.
The update also shows that US$976 403 was allocated on the Small Medium Enterprises auction which hit a high of ZWL$86 and a low of ZWL$76.50 on bidding rates.
Out of the 75 bids received, 11 were disqualified for violating the set regulations.
Both the Main and SMEs auctions were allotted more foreign currency for purposes aimed towards improving industrial productivity with a view to reducing imports.
The main auction was allotted US$6 million for raw materials, US$3.5 million for machinery and equipment, US$1,3 million for consumables while pharmaceuticals and chemicals were allotted US$903 000 among other priorities.
The SMEs auction was allotted US$373 000, machinery and equipment US$234 000, consumables 112 721 and pharmaceuticals and chemicals received US$59 584.
“Bids which were not eligible in terms of Priority List, with outstanding Bills of Entry and those with sufficient FCA balances were also disqualified,” said RBZ in a statement.
The current official exchange rates are maintaining a very close gap against parallel market rates which currently stand at between 1:90 and 1:95.
The closure of Ecocash’s Agent lines which were used as the main vehicle by illegal foreign currency dealers, the parallel market is currently struggling to push high valued transactions with capacity skewed towards smaller amounts.
Industry has hailed the RBZ auction for stabilising prices, achieving predictability for business planning and pushing away major companies from sourcing foreign currency on the parallel market but however believe that long term benefits will largely depend on how the regulator sustains the current momentum.