Zimbabwe dollar remains firm

by Grace Chekai

Various policy measures introduced by the Government to bring stability into the economy are bearing fruits as the local currency continues to gain value against the US dollar, if yesterday foreign exchange auction is anything to go by.

Yesterday, the Zimbabwe dollar gained 1.2 percent to ZW$81.7076 to 1US$ from ZW$82.6993 to US$1 last week. A total of US$21.2 million was allocated to various sectors of the economy, with the main auction taking US$20 million and the Small and Medium Enterprises (SMEs) taking US$1.14 million.

The lowest bidder was ZW$75 and the highest rate was ZW$88.The average weighted rate is now 7.15 percent lower than the highest bid from 6.02 percent, last week. The parallel market rate and average weighted rate difference increased to 28.95 percent from 28.09 percent, a week ago.

The firming of the Zimbabwe dollar against the US dollar can be attributed to various Government policies such as the restructuring of the mobile money transaction systems, the introduction of the auction system, the abolishment of the Old Mutual Implied Rate (OMIR)  and the introduction of individual transaction limits introduced by the Government.

Econet was accused as the major culprit that created artificial money, thereby causing distortions in the economy.

Addressing the ZANU PF provincial executive in Gweru last Saturday, President Emmerson Mnangagwa said Government authorities were forced to carry out intensive investigations to locate the source of the galloping inflation in Zimbabwe, and a committee which was set to investigate the matter discovered that there was up to ZW$8.4 billion, of phantom money, which was circulating outside the banking system.

Government then introduced various monetary policies to try and curb the inflation and strengthen the local currency, a move which has so far performed positively.