Zim-dollar eases marginally ZW$629 as CSOs call for increased RBZ independence

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By Alois Vinga

THE Zim$ depreciated by 0,21% on the Reserve Bank of Zimbabwe (RBZ) Foreign Exchange Auction maintaining a close gap behind the parallel market premium, a development which market watchers still believe to be economically healthy.

The development also comes amid calls by the Zimbabwe Coalition of Debt and Development (ZIMCODD) for authorities to increase the RBZ independence in order to deepen the gains of the current stability.

A trading update released Tuesday shows that the official exchange rate slightly moved from US$1: ZW$628,18 to this week’s US$1:629,55 thereby signifying a 0,21% depreciation.

However, market watchers believe that the slight movement is no cause for alarm since it is coming at a time when the parallel market premium is currently hovering between US$1:ZW$700 and ZW$800 and in some instances  parallel market dealers are struggling to  meet the demand due to acute local currency flows shortages.

Against the background, ZIMCODD’s monthly economic review for the period ended September 2022 has become one of the alternative voices to openly acknowledge the impact of the current developments.

“The official and alternative exchange rates have started to move toward convergence and price inflation moderating, with high inflation seen for the most part of 2022 subsiding,” reads the report.

“The  trend had seen  massive ZW$ depreciation and chronic price inflation had collapsed private savings, depleted real incomes, subdued aggregate consumer demand, widen income disparities, and plunged the majority into abject poverty.”

To sustain the current ZW$ and price stability, ZIMCODD said it is high time  for the government to further embrace fiscal discipline, increase central bank independence and thwart impunity.

Meanwhile, allotment on the Main Auction sustained the productivity spurring priority with total value of bids accepted amounting to US$10,6 million.

Raw materials were allotted US$4,9 million, Machinery and equipment US$2,7 million, consumables US$601,674, services US$1,5 million, retail and distribution US$470 150, pharmaceuticals and chemicals US$218,624, paper and packaging US$99 515.

On the SME Auction a total 104 bids were received totalling value bids accepted US$1 million with the bulk of which going towards productivity spurring.