Zim$ depreciates by 1, 3% as US$ demand dips on the RBZ Auction

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By Alois Vinga

THE Zim$ value this week depreciated by 1,3% amid indications that demand for the greenback is waning on the Reserve Bank of Zimbabwe (RBZ) Foreign Exchange Auction.

A trading update released at the close of business Tuesday shows that the exchange rate depreciated to US$1:ZW$621 from the figure of US$1:ZW$613 recorded last week signifying a 1,3% percentage decline.

Allotments during the day were tilted in favour of supporting the productivity which saw raw materials on the Main Auction receiving US$4,94 million, machinery and equipment US$1,84 million, Consumables US$803 831, Services US$1,57 million, Retail and distribution US$ 107 761.

On the SME Auction, out of the total US$1,468 million allotted, more than half of it went towards raw materials and machinery.

The grand total allotted on the two platforms reached US$11,011 million signifying a decline from the US$13,6 million allotted last week.

Economist Persistence Gwanyanya described this week’s outcome as an indication of waning demand for foreign currency due to the obtaining tight liquidity.

“What we are witnessing today is a significant reduction in foreign currency demand due to tight liquidity conditions obtaining in the market. As value for money continues to take effect, typified by high interest rates among other measures,” he said.

The top economist said the current developments, coupled with recent policies to increase foreign currency sales to a single entity from US$20 000 to US$100 000 on the interbank market will further reduce pressures from the Auction.

“In the long term, this will sustain durable stability while further reinforcing the disinflation narrative,” added Gwanyanya.