- Rate still stands at 1US$: ZW$83.89
- This is after falling from 83.75 two weeks ago
- Poorest performance since the enactment of the auction system
This week’s Reserve Bank of Zimbabwe (RBZ) foreign currency auction largely mirrored the one held in the prior week with the Zimbabwean Dollar coming out virtually unmoved from last week’s position of $83.89 against a single unit of the greenback.
The latest auction held yesterday (2 March 2021) however saw the total amount allotted slumping by over two million dollars from US$37.19 million in the prior week to US$35,11 million while the number of bids accepted on the main auction regained from 267 to 304 this week.
No change was recorded in the in the lowest and highest rates received as they remained at $82 and $87 respectively.
This sustained performance by the local currency remains the poorest in the foreign currency auction since its introduction by the Reserve Bank of Zimbabwe (RBZ) in June 2020.
This continued fall may be detrimental to the RBZ’s target of month-on-month inflation under 3 percent with the ultimate goal of achieving year-on-year inflation of below 10 percent by the end of the year. This is evidenced by the 5.43 percent rate recorded in January 2021 when the local currency started falling however there was a subsequent recovery in the rate in February to 3.45 percent which was however still below the target.
Meanwhile, reserve money which has a stronger effect on inflation rates increased by $1 billion to $19.91 billion, a 5 percent jump for the week ending February 19.
While the foreign currency auction has been key in the relative stabilization of the macroeconomic climate in the country, the availability of foreign currency remains its lifeblood and the government should do all it can to keep and encourage a constant supply.
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