ZW$ weakens by 1, 4% on RBZ Auction platform

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By Alois Vinga

THE ZW$ slightly weakened by 1,4%  on the Reserve Bank of Zimbabwe (RBZ) Auction platform on the back of a waning parallel market rate which experts say is temporarily driven by post elections self-fulfilling sentiments.

A trading update published at the close of business Tuesday shows that the exchange rate depreciated to a premium of US$1: ZW$ 4 712 from the premium of ZW$4 647 reached last week signifying a 1, 39% depreciation threshold.

After adding the -/+10% allowable threshold on the exchange rate traders are now allowed to peg their prices at a premium of ZW$5 812 against the greenback.

In comparison, rates on the parallel market are currently ranging around between US$1:ZW$6 500 or more  depending on float availability and demand factors.

But economist Persistence Gwanyanya attributed developments on the parallel market to temporary dynamics largely driven by perceptions.

“The RBZ Auction remains vibrant and maintains the status of being the largest source of foreign currency for local companies. To date there have not been any significant swings on the exchange rates .What we see on the parallel market are movements largely triggered by post elections perceptions on the possibility of a waning currency which will not subsist,” he said.

He said the current plans to incept the Gold Backed Digital Tokens (GBDT) known as Zimbabwe Gold (ZiG) for public transaction processes is set to further stabilize the ZWL.

Meanwhile, allotments on the platform were tilted towards supporting the productive sector with the Wholesale platform receiving US$18,7 million leaving a surplus of US$1,3 million from the amount of US$20 million on offer.

The platform sells foreign currency to banks which later dispose of the greenback to its clients on a Willing Buyer Willing Seller (WBWS)   interbank market.

On the Retail Auction Platform, US$266 877 was allotted towards raw materials needs, machinery and equipment US$303 210, Consumables US$136 003, Services US$303 084, retail and distribution US$152 697.

A grand total of US$1,16 million was allotted on the platform.