Local currency sheds 57% on auction system

  • The Zim dollar traded at ZW$57.35 to US$1 in June 2020
  • The higher the auction’s weighted-average rate rises, the higher the premiums bureau de change can charge, moving their rates closer to current parallel market rates
  • Forex allotment shortfall of US$ 5.8m
  • Highest bid rate received to-date at ZW$100

Harare – The Zimbabwean dollar has to date lost 57% against the United States dollar on the foreign exchange auction system since its introduction in June 2020. When the auction system was introduced, the Zim dollar traded at ZW$57.35 to US$1.

On the latest auction system of 12 October 2021, the Zim dollar further devalued against the US$ to trade at ZW$90.07 to US$1. On a week on week comparison, the Zim dollar lost 2% from a last week’s rate of ZW$88.55 to US$1.

During the past weeks, the local currency has been noticeably shedding a marginal but significant value, pushing the rate upwards on the auction system and this has dismissed one of the system’s functions which is to stabilise the exchange rate and deal with the black market activity.

At this rate, it is arguable that if the Zimbabwean dollar continues to devalue on the auction system, the bureau de change which sells foreign currency using the official rate will by year end trade US$1 for between ZW$100 or above after adding their defined margin to the auction rate which is 5%.

Meanwhile, the latest auction system recorded an increase in the total number of accepted bids to 1 196 on the SME auction, and 488 on the main auction from 1164 and 444 bids respectively.

The total amount allotted decreased by 22% to US$36.37 million from US$46.49 million allotted last week and for bids allotted, some allotments were on a “pro-rata” basis, which may mean some bids allotted did not match the bid demand levels.

The auction system recorded the highest bid rate received to date at ZW$100.

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