- Rate stands at 1US$: ZW$83.75
- The local unit fell from 83.37 in the prior week
- Highest rate received climbed to ZW$89
After holding the same position for two consecutive weeks the Zimbabwean dollar has come out of this week’s foreign currency auction ZW$0.37 cents weaker than its value held following the prior auction on the 9th of February 2021.
In this week US$1 will trade for ZW$83.75 up from ZW$83.37 in the previous week, a marginal but significant decline showing the local currency’s inability to turn the tide against the greenback since the beginning of the year.
The local currency has lost 2.36% of its value against the American dollar since the beginning of 2021 and indications are that this trend is set to continue.
Furthermore, the Zimbabwean dollar’s performance this week is the poorest since the introduction of the foreign currency auction system by the Reserve Bank of Zimbabwe bank in June 2020.
The latest auction saw a total of US$35,66 million allotted, a 10% increase from the amount allotted on the 9th of February which was US$31.98 million.
The number of bids also complimentarily scaled up from 303 in the comparative auction to 324 in the auction under review while the lowest allotted rate remained at ZW$82 but the highest rate received increased to ZW$89 for US$1 which is indicative of the consistent increasing demand of the greenback.
Consequently, the sustained losses could have a bearing on this month’s inflation rate as witnessed in January where the rate increased by 5.43% in month-on-month terms, the first rice since July 2020.
While, the foreign currency auction has been key in the relative stabilization of the macroeconomic climate in the country, availability of foreign currency remains its lifeblood and the government should do all it can to keep and encourage a constant supply.
This need is what motivated the MPC to tweak the export foreign currency earnings retention policy allowing the RBZ to retain 40% of exporters’ foreign currency earnings up from the previously required 30% all with the mind of keeping the belly of the foreign currency auction system sufficiently fed.
The auction is also set to benefit from the increase in commodity prices as over 80% of the country’s foreign currency earnings comes from pry products and a very significant increase in pricing has already been witnessed especially in PGMs with the price of rhodium catapulting 175% in February in month-on-month terms to US$21 900 per ounce and platinum prices touching a six year high last week to trade US$1 281 per ounce.
All good news from Zimbabwe which has the second largest platinum deposits behind South Africa.
Equity Axis News.