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Business Reporter
The Reserve Bank of Zimbabwe (RBZ) weekly foreign currency auction allocations have improved to average US$17 million from as low as US$9 million during the last quarter of 2022.
The increase largely reflects increased demand from manufacturing companies seeking capital for raw materials and machinery and equipment.
At inception, the RBZ weekly foreign currency auction used to allot between US$35 to US$40 million.
The auction was set up as a price discovery mechanism for the local currency as well as availing foreign currency to local companies needed for procurement of raw materials and retooling.
According to this week’s auction report, a total US$17,56 million was allotted, with US$7,85 million allotted towards raw material bids.
The increased allotments come as Zimbabwe received improved foreign currency inflows estimated at over US$10 billion last year.
Diaspora remittances grew 15,9 percent in 2022 to US$1,65 billion after around US$290 million was received in the last two months of the year. This compares to 2021 remittances of US$1,43 billion.
Diaspora remittances usually make up a sixth of the country’s foreign currency receipts and are the third largest forex earner next to gold and platinum group metals (PGMS).
According to RBZ Govenor Dr John Mangudya, US$51,79 million was allotted to 263 beneficiaries under the main foreign exchange auction during the month of January 2023 and the sum of US$5,88 million was allotted to 386 beneficiaries under the SMEs foreign exchange auction during the same month.
He said total foreign exchange payments for the month was US$768 441 983 with foreign currency accounts at US$684,79 million, foreign exchange auction allotments US$57,68 million and interbank market at US$25,96 million.
Dr Mangudya said the bulk of the auction allotments during the month of January 2023 at 68 percent was for payment for raw materials and amounted to US$32,19 million and machinery and equipment US$6,94 million.
He said the remaining 32 percent of the total allotments going towards payment for services US$5,39 million, consumables US$4,05 million, retail and distribution US$4,99 million, pharmaceuticals and chemicals US$1,72 million and packaging US$2,36 million.
“Total cumulative foreign exchange auction allotments since inception of the foreign exchange auction system stood at US$3,768 trillion.
According to Dr Mangudya the upcoming tobacco marketing season is expected to augment forex inflows into the country and lead to enhancing stability in the foreign currency market and continuation to price stability.
Traditionally, the tobacco marketing season has been associated with improved liquidity on the market and last year brought in more than US$900 million in earnings.
“Tobacco is an important crop for the country and the upcoming tobacco marketing season is expected to augment forex inflows into the country and thus leading to enhancing stability in the forex market and of course to the continuation of price stability,” he said.
He indicated that with Zimbabwe being the largest tobacco producing country in Africa and on the top six producers of tobacco in the world, the central bank is pleased with the economic impact of this crop on the economy from forex generation to employment creation.
Online Reporter