RBZ Auction’s Bidding Rates Sustain Stable Margins

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By Alois Vinga

RESERVE Bank of Zimbabwe (RBZ) bidding rates have sustained stable margins since the platform’s inception, indicating the possibility of long-term exchange rate stability.

Launched in June last year, most companies have hailed the platform for achieving pricing predictability and slowing down both monthly and yearly inflation from a high of 837 % to the current levels of 240 %.

A trading update released at the close of the FX40/2021 shows that bidding rates reached a high of $87 and a low of $82 against US$1 on both the Main and Small to Medium Enterprises (SME) auction platforms.

Since last year, bidding rates have not surpassed $90 in a development described by a section of market watchers as an indication of the possibility of long-term exchange rate stability.

The official exchange rate closed trades at a premium of $84.39 against US$1 further a stable lead for almost a year now.

The premium is closely lagging behind the parallel market exchange rate which currently stands at $100 for every US$1.

However, most companies including some of those benefiting from the auction platform continue to exhibit wayward tendencies of charging for their goods and services at premiums which are way above the parallel market rate with some demanding US$110 for an equivalent of US$1.

On the main auction, raw materials were allotted US$11.2 million, machinery and equipment US$4.6 million, consumables US$1.6 million, Services US$1.7 million, retail and distribution US$1.4 million, fuel, electricity and gas US$1.2 million, pharmaceuticals and chemicals US$1 million.

The total allotted on the platform was US$23.1 million.

On the SME auction raw materials were allotted US$532 813, machinery and equipment US$387 153, consumables US$507 803, services US$162 158, retail and distribution US$156 723, fuel, electricity and gas US$119 937 among other allotments.

The total allotted on the auction was US$2 million.