- The auction set a new record of $US51.69
- Number of bids received scaled up during the week
- ZW$ closed at ZW$85.90
Harare - The Reserve Bank of Zimbabwe (RBZ)'s weekly foreign currency auction registered a new record this past Tuesday as allocations amounted to US$51,69 million reflecting high demand for the greenback by companies who are desperately seeking to recover from the pandemic induced slump.
At that latest figure, the auction market erased last week's record of US$49.10 million which was allotted to bidders. For this week, US$36.532 million was allotted to the big companies, while SMEs took up US$15.157 million.
In a common, but questionable trend, the rate registered a marginal increase to ZW$ 85,90 against US$1 dollar from ZW$85.82 in the previous week.
The number of total bids received this week for both the SME auction and the main auction scaled up to 971 and 425 from 843 and 413 received last week respectively.
Meanwhile, the number of bids disqualified at SME at 34 was down from 79 last week while the main auction disqualified 26 bids, up from 24 for last week.
However, the RBZ is currently struggling to meet the rising demand for foreign currency as it is faced with a high backlog which may force some companies to turn to the parallel market.
Earlier this month it was reviewed that the Central Bank is faced with a backlog estimated at around US$200 million which goes against one of the key targets that led to the introduction of the weekly foreign currency auction, which is to improve access to the greenback for production purposes.
The permanent secretary in the Ministry of Finance George Guvamatanga, however, promised that the backlog will be cleared within a period of 30-45 days.
Meanwhile, the variance between the official exchange rate and the parallel market rate continues to widen although the official market was introduced with the goal to stabilise the exchange rate and get rid of speculative activity on the black market.
Scholarly research shows that the development of the parallel market for foreign exchange with a high premium indicates a basic disequilibrium both in the foreign exchange market and trade regimes and, as a result, involves substantial social and economic costs.
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