• The ZWL witnessed a marginal drop on the auction market held on 10 October 2023
• It traded at ZWL5633.9332 compared to ZWL5591.9615
• This decrease represents one of the least significant declines since the post-election period

Harare- The Zimbabwe dollar has witnessed one of the most insignificant drops in the latest auction market held on the 10th of October 2023, trading at ZWL5633.9332 compared to ZWL5591.9615.

This decline is similar to the least decline recorded after the election, which was 1% on September 6, 2023.

However, despite experiencing the least depreciation, the currency has maintained its downward trajectory, resulting in a widening premium of 21%.

The government, through the treasury, has implemented strict regulations regarding the payment of suppliers and exporters. This deliberate action is causing an artificial shortage of the Zimbabwe dollar, effectively managing the rapid depreciation of the currency.

As an additional measure to bolster its US dollar reserves, the government has announced the issuance of a 90-day treasury bill. The treasury bill will be open for subscription starting tomorrow at 8am and will close on the same day at 12pm. Unlike Zimbabwe dollar-denominated treasury bills, treasury bills denominated in US dollars are not susceptible to inflationary pressures and therefore retain their value over time.

The government has adopted this approach to increase payments to contractors and employees in US dollars, as well as to fund projects aimed at managing inflation. By utilizing US dollars for these payments and projects, the government aims to mitigate the impact of inflation and ensure more stable financial transactions and investments..

However, the deliberate scarcity of Zimbabwe dollars caused by delayed payments is severely affecting company operations. Companies require Zimbabwe dollars to sustain their internal operations, and the withholding of 25% of their revenue, which is meant to be paid in Zimbabwe dollars, further exacerbates the situation. This delay in payment by the Treasury hampers the timely utilization of funds that are crucial for the smooth functioning of these companies.

As a result, exporters are also being negatively affected in some way or another. We expect a continued downward trend to persist in the last quarter of the year, although it is likely to occur gradually. This is due to the government's cautious approach in containing and managing Zim dollar liquidity, which is aimed at maintaining stability.

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