- The ailing currency declined by 5% from 3% last week
- Early August ,the ZW$ narrowed losses by 5%
- US$18 million was allotted up from US$16 million in the prior week
Harare- The Zimbabwe dollar traded on the back-foot on the latest RBZ-governed Auction Market held on Tuesday after shedding by 5%, which is a record decline in four weeks. During the second trade in August, the local currency narrowed deficits by 5% while during the prior week, it lost by a marginal 3%.
Zimbabwe dollar depreciated by 5% to ZW$521.3451 from ZW$494.9883 last week against the United States dollar.
The crush of the Zimbabwe dollar (ZW$) on the Auction Market comes amidst the introduction of the gold coins by the RBZ last month on the 25th as a hedge against inflation, a move which is expected to bring the ailing currency to order.
Also, the decline came at a time the Central Bank governor said the auction market will be only responsible for allocating foreign currency to companies and will not be used as a demarcation for exchange rates, a move from an auction market to an allocation market.
Dr Panonetsa Mangudya (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 (MPS).
Due to the high demand for the greenback, US$18 million was allotted up from US$16 million last week adding more strains to the RBZ coffers which is yet to clear a backlog of US$169 million at an unspecified time.
Meanwhile, the highest rates and lowest rates received for the Zimbabwe dollar against the US dollar were 580 and 485 respectively up from 550 and 460 during the prior week, an indication not only of rejection of the local currency but also of high RTGS liquidity in circulation which the business needs to unburden itself with.
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