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RBZ Auction: Zwl Depreciates by 3,1% as Limited Local Currency Chokes Bidders

THE ZW$ depreciated slightly by 3,1% on the Reserve Bank of Zimbabwe (RBZ) Foreign Exchange Auction this week with a section of market watchers attributing the decline to the reduction of usable local balances in the market.

A trading update released at the close of business Tuesday shows that the official rate depreciated to US$1: ZW$ 6 926 down from ZW$6 713 set by the Wholesale Auction last week to signify a 3,1% depreciation margin.

A total US$1,1 million was allotted on the Foreign Exchange Auction with US$10,6 million being allotted on the Wholesale Auction.

Economic analyst Persistence Gwanyanya said this week’s Wholesale and Dutch Auction results is clear testimony confirming the argument of tightening ZW$ conditions.

“Only 12 out of 19 banks managed to submit their applications for forex ostensibly on account of tight ZW$ positions.

“Imagine what will happen next week after quarterly collections tax payments from companies by the treasury. As l have always argued, aggressive demand for ZW$ by the government will be a game changer.

“That way we expect voluntary US$ liquidation, which is key to sustaining stability,” he said.

The bulk of allotments during the day went towards raw materials needs at US$251 242, machinery and equipment US$576 203 and Consumables US$69 339.

Large corporations and other entities are now accessing the foreign currency through the Wholesale platform via banks at market determined rates.

Meanwhile, trades on the parallel market are hovering around US$1:ZW$6 500 but the majority of traders continue to face challenges to meet demand prompting some dealers to pay much lesser premiums in some instances.

The situation is however different with some retailers who are indexing the greenback at much higher premiums.

Source : Newzimbabwe