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Sunday, June 26, 2022
HomeBusinessLocal Currency Sheds 3.9 Percent At RBZ Auction

Local Currency Sheds 3.9 Percent At RBZ Auction

The Zimbabwe dollar fell by 3.9 percent to ZW$ 352 per American dollar in this week’s auction system, down from ZW$ 338.5 the previous week, but remains much below the widely used parallel market rate of ZW$ 600 per dollar.

The widening exchange rate gap between the official and the parallel market rates now at 70.5 percent continues to pile up problems for authorities who are desperately trying to save the local transacting unit from crashing.

The parallel market rates continue to race unabated while the official rate from the auction system is relatively pacing at a much slower rate.

At the same time, the interbank rate recently reintroduced for foreign exchange among banks is almost trading at par with the auction rate at $351.9584/USD.

Experts warn that the multiple exchange rates now prevailing in the economy are causing distortions which are in any case mounting inflationary pressures.

In yesterday’s auction, a total of US$ 24 898 242.61 was awarded to both the SME and Main exchange.

For the SMEs auction, the biggest chunk of foreign currency was channeled to machinery and equipment at US$ 1.233 million followed by raw materials valued at US$ 957 593.45.

On the Main auction, raw materials constituted the bulk of foreign currency allotted at US$ 10.7 million with machinery and equipment getting half the foreign currency at US$ 5.1 million.

In an effort to reduce bread prices, the RBZ said this week that it will provide bakeries with all of the foreign cash they need through the auction system, protecting them from fluctuations in exchange rates.

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