Chronicle Editor
Business Writer
THE Zimbabwe dollar is fast regaining value against the US dollar with the weighted average rate at the wholesale foreign exchange auction yesterday pegging the local currency at US$1: $5,739 from US$1:ZWL6,326 on Tuesday.
Expectations are that the exchange rate (official and parallel market), which recently took a battering from the negative impact of excess liquidity in the market, will strengthen in favour of the local currency going forward.
Since the introduction of the wholesale auction, financial institutions have been struggling to raise Zimbabwe dollar funding enough to buy more than US$1 million at any given time.
In an update yesterday, the total value of bids accepted was US$3,5 million with US$2,9 million allotted.
Based on the Reserve Bank of Zimbabwe update, the highest bid rate received was US$6 000 while the lowest was US$5 263.
On Tuesday, financial institutions only managed to buy a third of the US$30 million foreign currency available on the wholesale foreign currency auction as the Zimbabwe dollar liquidity crunch hits the market.
In the first wholesale foreign currency auction early this month, 19 banks were allotted US$11,18 million as authorities switched to the banking system’s interbank market.
As part of the reforms, the RBZ’s Monetary Policy Committee (MPC) met early this month and came up with additional interventions aimed at ensuring that the interbank forex market became the primary source for foreign exchange needs in the economy.
The latest development overtakes the auctions that have carried the burden for just under three years since the middle of 2020.
In taking measures to address issues affecting the economy, the MPC noted that the prevailing volatility in the exchange rate emanated from both supply-side and demand-side factors.
Online Reporter