The Zimbabwe dollar fell by 2.30 percent against the American dollar in yesterday’s foreign currency auction to settle at ZW$ 115.4223 from ZWL$ 112.8228 recorded during previous week session as the local currency continues to lose ground amid concerns that authorities are failing to put necessary buffers to sustain it.
Further worrying is the widening gap between the official rate and the parallel market rate which now trades at ZWL$ 230 against the greenback, creating pricing distortions which are applying inflationary pressures on the economy.
This week, the Central Bank met with captains of industry who urged the Government and the Bank to come up with strategies to enhance the attractiveness of the local currency and strengthen its demand in the context of the multi-currency system currently in place.
As it stands, there is overwhelming demand for the scarce foreign currency on the market which is making the local currency less attractive.
This was evident in yesterday’s auction where bids by local companies seeking the USD from the Central Bank increased significantly.
Bids received at the SME auction increased to 906 from 633 previous week and bids received for the Main auction yesterday also increased to 537 from 448 received previous week.
The disqualification rate remains high, as authorities are keeping a close eye on companies and individuals who are abusing the auction system.
A total of 209 bids were disqualified from the SME auction while 115 also met the same fate on the Main auction.
A total of 697 and 422 bids were accepted and allotted from the SME and Main auctions, respectively.
The highest rate received was ZWL$ 130.0000 from both auctions while the lowest bid rate received was ZWL$ 106.0000 on the SME auction and ZWL$ 107.0000 on the Main.
A grand total of US$ 38775 772.07 was awarded, compared to a total of US$ 30 866 275.90 awarded previous week.
With the Monetary policy statement expected to be announced within the next 30 days, captains of industry this week urged government to come up with appropriate incentives for exporters to improve production and productivity to increase foreign currency receipts which will ease pressure on the auction system.
To curb the parallel market rate, industry advised the Financial Intelligence Unit (FIU) to continue penalising currency manipulators and abusers of foreign currency auction rules and breaches of the Bank Use Promotion Act.