ZWL slightly weakens by 0.75% on the RBZ Auction

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By Alois Vinga

THE ZWL slightly weakened by 0.75% on the Reserve Bank of Zimbabwe (RBZ) Foreign Exchange Auction this week on the back of a significant amount of foreign currency allotted to the country’s key economic productive sectors.

A trading update released at the close of business Tuesday shows that the exchange rate depreciated to US$1: ZWL 5 633 down from the premium of ZWL5 591 recorded last week to signify a 0.75% decline.

Accordingly, traders are allowed to peg the US$ at a high of ZW$6 196 after factoring in the -/+ 10% below or above the official exchange rates.

At that premium, the rates remain relatively stable as they are maintaining a close gap behind the parallel market rates where premiums of US$1: ZW$ 6 500 are being paid out for ordinary trades. However, some players in the alternative market are pegging the premiums higher than the aforementioned peg largely dependent on demand pull factors.

Meanwhile, trades on the Wholesale Auction platform where banks purchase foreign currency for onward sales to their clients received a total of 17 bids which were allotted US$18,1 million which is below the US$20 million amount on offer.

Market watchers believe that such a trend signifies that the levels of liquidity in the market are still under control as the Auction’s available foreign currency is not purchased entirely.

On the Retail Auction platform, a total of US$1,86 million was allotted, out of which Raw Materials took up US$552 534, machinery and equipment US$468 099, consumables US$209 539, services US$323 296, retail and distribution US$175 616 among others.