daniel chigunwe
Business Writer
Foreign currency allocation from the Reserve Bank of Zimbabwe (RBZ)’s auction system hit record levels at US$46,9 million, as the average exchange rate for the Zimbabwe dollar against the United States dollar was virtually unchanged at $85,24 from $85,07 last week.
All accepted bids were fully allotted, with the big companies being allotted the bulk of the foreign currency at US$38,9 million, while SMEs took up US$7,9 million.
The central bank is the sole supplier of the hard currency on the auction platform.
The total number of bids on the auction platform continued to tick upwards, also rising to a record high of 997.
918 bids were allotted.
This week the highest bid on both the SMEs and main platform was $90, while 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$14,48 million on the main auction and US$1,84 on the SMEs section.
Machinery and equipment came in second with US$8 million on the main and US$1,98 million on the SMEs section. And consumables came in third on the main auction at US$3 million; but on the SMEs section, consumables took up US$2 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.
Meanwhile, earlier in the day, the apex bank released a list of 18 companies that are facing penalties over abuse of foreign currency obtained from the foreign currency auction system.
This comes after the promulgation of Statutory Instrument 127 of 2021 last month, which cemented regulations over the use of hard currency.
The 18 companies include: National Foods (Pvt) Ltd, Georgia Petroleum (Pvt) Ltd Company, Tettola Investments (Pvt) Ltd, Africa Steel (Pvt) Ltd, Westvillle Investments (Pvt) Ltd, Flicknik Enterprises (Pvt) Ltd, Duo Valley Commodity Brokers, Faircclot Investments, GlenuLas Trading, Natural Stone Export, and Nuvert Trading.
Other companies also include Phirebrook Investments, Classic Energy (T/A Omni Africa), Clorex Energy, Explochem, Mutare Mart & Exchange, Souzrce Fuels and Kimya Investments.
Central bank governor Dr John Mangudya said the authorities will zero in on companies that continue to abuse the auction system.
“After investigations by the Financial Intelligence Unit and the Bank’s Exchange Control Division, the entities listed hereunder which were abusing the foreign exchange auction system shall be dealt with in accordance with SI-127.
“Going forward and in line with the recommendations from the business community on the need to continue
to enhance stability in the economy, the Bank’s efforts to foster compliance in terms of SI-127 shall be limited to outliers that wantonly abuse the foreign exchange auction system, exchange rate manipulation and non-compliance with anti-money laundering rules and regulations.
“The Bank’s focus on these key areas, coupled with business’s reality check, self-discipline, self-monitoring and peer-review, will sustain inflation and exchange rate stability that are necessary for the economy to continue to rebound.”
Going forward, companies’ use of hard currency accessed from the auction system is expected to be more efficient following last week’s promulgation of SI-127 of 2021.
The new regulations, contained in SI-127 of 2021, seek to ensure effective usage of foreign currency obtained through the central bank’s foreign currency auction system.
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 multicurrency environment; Issuing a local currency receipt for a foreign currency purchase, and use of foreign currency acquired through the central bank’s auction system.
Online Reporter