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Zimdollar loses value moving from US$1: $85.074 ZWL to US$1: $85.2455 ZWL

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Reserve Bank of Zimbabwe (RBZ) Governor Dr John Panonetsa Mangudya may be getting his act together by ensuring the dollar loses or gains marginally always.The Zimbabwe dollar further dropped against the United States Dollar (USD) when the RBZ conducted a foreign currency (forex) auction yesterday 15 June 2021.Officially, the the weighted average fell slightly as Zimbabwean dollar marginally lost value as it moved from US$1: $85.074 ZWL to US$1: $85.2455 ZWL this week.

A Grand Total of US$46 913 363.00 was distributed through the auction during the week of 1 June 2021.About US$46.9 million was disbursed through the auction compared to about US$34.8 million last week.

There have been 50 main auctions and 44 SME auctions since the auction system began.

The average rate is to be used with caution. Here is an explanation on why the rate is to be treated as a rough guide rather than used for internal calculations.

Reasons for disqualification include things like the need for the foreign currency not being on the priority list, the bidding company has what appears to be adequate foreign currency in their accounts, companies that seem like they are externalising etc.

What all this means is that demand for foreign currency still far outstrips supply and some people/entities who wanted foreign currency were not able to get it.

More often than not these entities find a way to get that foreign currency as failure is not an option.

This week US$7.9 million was allocated to the Small to Medium Enterprises forex auction while US$39. million was allocated to the main forex auction.

In total, US$46.7 million was allotted this week, up from US$34 million allotted last week, with the bulk of the allotment going to raw materials followed by machinery and equipment.

546 bids were received on the Small to Medium enterprises forex auction, with 521 accepted and 25 disqualified.

On the main forex auction, a total of 451 bids were received, 397 were accepted while 54 were disqualified.

The Reserve Bank of Zimbabwe (RBZ) said bids that were disqualified were not eligible in terms of the Priority List.

Bids with overdue CDIs, outstanding Bills of Entry (BOEs), and those with sufficient FCA balances were also disqualified.

Some bids were allotted on a pro-rata basis to conform with the Import Priority List, the RBZ said. Pindula News present below the table summarising what transpired on Tuesday.

The data published by the RBZ shows that the bulk of forex trading takes place on the forex auction however, this market is not yet open to individuals who earn RTGS and are in need of forex for example:

Individuals who want to pay their pay-TV subscriptions which are only payable in USD- in one year the RBZ revealed almost US$100 million was being spent on this.

Individuals looking to pay fees for themselves or their children in foreign universities, people who want to import vehicles and other goods and services for themselves.

Also informal businesses whose import needs are not in line with the foreign currency priority list adds to the above.

Ross Moyo

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