The Zimbabwe dollar (ZWL) extended its downward movement during Tuesday’s auction at the Reserve Bank of Zimbabwe losing 3.98% to breach the 600 mark for the first time and settle at ZW$ 604.2580 against the American dollar.
This puts the auction rate within reach of the street parallel market rates which have been struggling to break the 700 band owing to a tight monetary supply policy by authorities.
The Reserve Bank of Zimbabwe has been working towards narrowing the gap between the formal and parallel market rates for some time which was the major root of inflation since the adoption of the local currency in 2019.
Economists say the introduction of the gold coins have proved to be a master-stroke, at least for now- as excess liquidity has found its way back to the Central Bank through purchases of the yellow metal coin.
In today’s auction, a grand total of US$ 15.63 million was awarded to local companies with the Main auction awarding US$ 13.43 million while the SME auction awarded US$ 2.2 million.
The highest bidding rate received was ZW$ 650 from the SME auction and ZW$655 from the Main auction which is almost at par with some parallel market rates of between ZW$650-700.
However, the lowest bidding rate for both the Main and SME auctions was ZW$ 570.
Raw materials remain the biggest consumer of funds on both auctions having received US$ 709.8 thousand from SME auction and US$ 5.58 million from the Main auction.