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Tuesday, June 25, 2024
HomeBusinessZim Dollar Retreats 0.30% On Wholesale Auction

Zim Dollar Retreats 0.30% On Wholesale Auction

The Zimbabwe dollar (ZWL) withdrew 0.30 percent to sit at 4556.1616 against the American dollar this afternoon on the Reserve Bank of Zimbabwe (RBZ) wholesale auction as the local unit continues to reverse recent gains.

The ZWL recorded significant gains in recent weeks as measures put in place by authorities to curb the run-away exchange rate took effect.

The latest drop follows Tuesday’s 0.6% decline as Treasury has been settling payments to its contractors albeit in a drip-feed manner to avoid exchange rate movement spikes.

Authorities introduced the wholesale auction to allow for banks and authorized dealers to secure foreign currency which they in turn resale to the market at a 5 percentage margin.

In today’s auction, 13 banks placed their bids which were all accepted but 11 were able to secure foreign currency.

The total value of bids accepted amounted to US$ 13.8 million yet US$12.5 million was allotted as US$15 million was on offer.

The highest bid rate received was 4573 for one American dollar while the lowest bid rate allotted was 4535 for one American dollar.

Last week the RBZ Monetary Policy Statement expressed satisfaction with its current tight monetary policy stance that has managed to ease the exchange rate movement and inflation.

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However, there are concerns that the recent stability in the exchange rate is “artificial” as it is not backed by any macro-economic fundamentals but mere closing of taps on ZWL liquidity by the Central Bank.

The move has also drawn criticism for producing unintended outcomes, namely the promotion of the USD currency in the economy in opposition to the government’s aim of maintaining a local currency.

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