Chronicle Editor
Nqobile Bhebhe, [email protected]
THE local currency has further firmed at the wholesale foreign exchange auction to $5.395 against the US dollar from $5,739 last week.
This is an indication of the market’s positive response to a series of policy interventions put in place by monetary authorities to mop up excess local currency liquidity.
The sustained strengthening of the exchange rate and prevailing stability is key as it sends a strong message to the market that stability will be durable.
Some of the recent strategic interventions introduced by authorities include a directive for all import duties to be paid in Zimbabwe dollars, except for luxury items, transfer of external payment obligations from the Reserve Bank of Zimbabwe (RBZ) to the Treasury and introduction of the wholesale foreign currency auction for banks.
Further, the Treasury has also directed that all Government institutions must collect fees and charges the local currency and 50 percent of corporate tax payments to be made in Zimbabwe dollars, while the central bank raised its bank policy rate from 140 to 150 percent.
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.
In today’s update US$20 million was on offer attracting 11 bids worth $4.3 million accepted while $4.1 million allotted.
Based on the Reserve Bank of Zimbabwe update, the highest bid rate received was $5 550 down while the lowest was US$5 200.
Online Reporter