The RBZ is still the sole supplier of the hard currency on the auction platform as the Zimbabwe dollar this week trades largely unchanged against the US dollar at $84,76 from $84,74 last week following yesterday’s Reserve Bank of Zimbabwe (RBZ) foreign currency auction, as use of hard currency accessed from the auction system is expected to be more efficient following last week’s promulgation of Statutory Instrument 127 of 2021.
This comes on the backdrop of a recent headache which ”rattled the markets” in the words of Confederation of Zimbabwe Retailers President Denford mutashu. SI 127 OF 2021.The regulations contained in SI-127 of 2021 seek to address businesses’ pricing of goods and services only in forex, which is not in line with the prevailing multi-currency environment; Issuing a local currency receipt for a foreign currency purchase, and use of foreign currency acquired through the central bank’s auction system.
In terms of the new regulations, companies face a fine of up to $1 million (approximately US$11 800) or an amount equivalent to the value of the foreign currency obtained will be imposed for misuse of foreign currency obtained from the Reserve Bank of Zimbabwe’s foreign currency auction system.
And both businesses and individuals will also be liable for a penalty of $50 000 if they refuse to accept payment in local currency at the prevailing official exchange rate, or if they charge above the official rate.
All accepted bids were fully allotted, with the big companies being allotted the bulk of the foreign currency at US$32,5 million, while SMEs took up US$5,9 million.
Yesterday’s total allotments amounted to US$38,5 million.
The total number of bids on the auction platform continued to tick upwards, rising to a record high of 739.
670 bids were allotted.
This week the highest bid on the SMEs platform was $90, while that on the main auction was lower at $89. The lowest rate allotted on both platforms was $82.
Foreign currency disbursements to industries saw raw materials accounting for the bulk of allotments at US$14,68 million on the main auction and US$1,54 on the SMEs section.
Machinery and equipment came in second with US$5,7 million on the main and US$1,2 million on the SMEs section. Some consumables came in third on the main auction at US$2,5 million; but on the SMEs section, consumables took up US$1,3 million.
The foreign currency auction system has brought about pricing stability, and both the fiscal and monetary authorities have maintained a tight leash on money supply growth.
Over the weekend, the central bank announced that businesses had two weeks to become fully compliant with new foreign currency regulations.
The new regulations, contained in Statutory Instrument 127 of 2021, seek to ensure effective usage of foreign currency obtained through the central bank’s foreign currency auction system.
“Businesses have been given two weeks to regularise their systems so that they can comply with the SI on the receipting of goods and services in either foreign currency or local currency.
“The SI is an essential means of enforcing compliance which is necessary for continued stability.