• The ailing currency traded at 494.9883 from 478.6358 last week
  • On the interbank, the rate is currently trading at 493.0657 against US$
  • The parallel market remains in a region of between 800-950

Harare- The local currency shed by 3% against the United States dollar on the latest RBZ-governed auction market held on Tuesday, data from RBZ shows. 

The under-fired currency traded at 494.9883 from 478.6358 registered last week. However, the number of bids received and the amount allotted fell sharply compared to the prior week. 

The number of bids on the small auction decreased to 328 while on the main auction to 134 compared to 535 and 176 recorded last week.

There was also a sharp decline in allotments from US$21.5 million last week to US$16.6 this week. 

The sharp decrease comes at a time RBZ plans to clear a backlog of US$169 million at an unspecified time and also the auction market has shifted from auction market to allocation market. The Central Bank governor has shifted from his rhetoric that the auction was meant to “discover” the right exchange rate after announcing that the platform will be only responsible for forex allocation.

 “In this context, the foreign exchange auction system is no longer a price discovery mechanism but instead the most ideal allocative platform of foreign currency in the domestic economy given the geo-political constraints facing the local banking industry to establish an efficient interbank foreign exchange market,” RBZ governor John Mangudya said in his latest mid-term Monetary Policy Statement. 

Since the commencement of the auction market on 23 June 2020, RBZ has allocated US$3.43 billion to the currency auction.

Meanwhile, the highest rates and lowest rates received for the Zimbabwe dollar against the US dollar marginally increased, a greenlight that the gold-backed currency might get remorse in the long-term.  

On the interbank market, the rate has gone up to 495 against the single greenback, which is also an overvalued rate.

The parallel market rate, the rate that reflects the undisputed economic status of the nation remains twice that of the interbank at a maximum of circa 1000. 

Equity Axis News