by Staff Reporter
The Reserve Bank of Zimbabwe is set to hold its 2nd foreign currency auction today after the inaugural auction had a flying start on Tuesday last week, with the Zimbabwean dollar debuting at ZWL57.36 against the US$1.
The weekly auctions were introduced to enhance transparency and efficiency in the forex market, thereby arresting the run-away inflation and stabilising the exchange rate.
The second forex auction comes amid revelations that industrialists were quite optimistic of the trading system. A contact within the Confederation of Zimbabwe Industries (CZI) said the industrialists’ body conducted a survey which revealed that most of the entrepreneurs were hopeful and happy with the system.
“Most industrialists lauded the fact that out of the US$10 345 254.04 allotted in the inaugural auction, US$5 290 718.94 went towards raw materials, machinery and equipment which they said would go a long way in invigorating the manufacturing sector,” said the contact.
He said industrialists were of the opinion that the policy move would foster transparency, and efficiency in the allocation of foreign currency which should subsequently result in the convergence of exchange rates and realignment of the economy.
Naison Taderera, an economist with a local bank implored the monetary authorities to continue promoting a market determined exchange rate to avoid interference by the administrative hand.
Taderera said there was need to maintain transparency in the implementation of the trading system, adding that there was also a need for a constant flow of foreign currency onto the market.
However, following the maiden forex auction, a number of challenges were generally noted. Prices of goods and services responded to the upward review of the official exchange rate resulting in sharp increases of same. Bread, which was selling at between ZWL$61.99 and ZWL$63.00 just before the auction rose to between ZWL$66.00 and ZWL$77 per loaf.
Zimgold cooking oil price escalated from ZWL229 to ZWL$249.99, translating to 8.7% rise. A 2kg of Gloria self-raising went up by 16% from an average of ZWL$180 to a new average of ZWL209.99.
A survey contacted by this publication unearthed that some fuel stations were not dual pricing as directed by the new regulation issued by the RBZ.
“The Ministry of Industry and Commerce must play a role in the enforcement of dual pricing at the official exchange rate. The RBZ alone cannot be the only relevant authority,” said a contact within the RBZ.
Economic analysts noted that different exchange rates continue to be applied by business operators in disregard to the official exchange rate determined by the market. Inscor outlets, Chicken Inn and Pizza Inn are using a rate of 1: ZWL90 while Pick ‘n’ Pay and Spar have adopted the official rate.
A number of pharmacies and hardware shops are using a rate of between ZWL$100 and ZWL$120 to US$1 to dissuade customers from using the local currency.
Analysts said there was need for Government to monitor compliance after a policy had been pronounced.