By Alois Vinga
THE Zimbabwean dollar slightly weakened by 0,74% on the Reserve Bank of Zimbabwe foreign exchange auction this week but still maintained a close gap to the black market premium.
A trading update released at the close of business Tuesday shows that, at a rate of ZW$626,18:US$1, the local currency slightly depreciated by 0,74% from the rate of ZW$621:US$1 recorded last week.
Economic expert, Dr Prosper Chitambara, said despite the depreciation, this week’s results are still positive as they are maintaining a close gap to the parallel market rates.
“With the parallel market rate currently averaging between ZW$700 and ZW$800 against the greenback, what we see on the official market is quite positive considering that the current official premium is almost closing the gap,” he said.
Chitambara pointed out that the dwindling figures in the total amount allotted on both platforms to the tune of US$10,4 million partly reflects the unavailability of the Zim$ due to tight liquidity obtaining in the market.
“It is also a reflection of the central bank’s commitment to allot only what is available and, in the process, avoid the accumulation of backlogs as was the trend in the recent past,” he said.
Also commenting on the figures, economist Persistence Gwanyanya said the trends are setting a springboard for competitiveness on the interbank market.
He said the market dynamics are changing with the weekly auction allocations dwindling but interbank trades are starting to pick up.
“The traction on the interbank will be supported by the recent increase in interbank limit from US$20 000 per week to US$100 000,” he said.
“This encourages banks to be more aggressive in mobilizing foreign currency for on-sell. Banks that create value for their customers will be the winners. The interbank has to be more efficient and effective.”
Gwanyanya added that, as interest remains high, banks have to support their customers, especially those borrowing with foreign currency.
“Some banks are prefunding Auction allocations to create value for their customers and we expect this trend to continue at more banks. “
Meanwhile, during the course of trading on the Main Auction platform, a total US$9,3 million was allotted with the largest amount of US$3,6 million going towards raw materials imports.
Other productivity related needs like machinery and equipment gobbled US$2,3 million, consumables US$360 939, services US$2,4 million, retail and distribution US$300 079, pharmaceuticals and chemicals US$220 816.
A similar pattern was observed on the SME Auction platform where 125 bids out of 128 were allotted with a total value of accepted at US$1,164 million.
A synonymous trend on both the platforms is that only a few bids were turned away with the Main Auction rejecting only two while the SME platform turned away just three.