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Herald Reporter
The official exchange rate, the weighted average at the auctions administered by the Reserve Bank of Zimbabwe (RBZ), went through the $100 mark on Tuesday reaching $105,6965 to US$1, a fall of 5,8 percent in a single week from the $99,9301 seen at last week’s auction.
Over the past seven weeks since the end of September, when the present trend of significant decline in the value of the local currency against the US dollar started, the local currency has fallen in value by 20,5 percent after a long period of very small weekly and monthly changes.
The minimum bid on accepted bids, which was also the minimum bid that was allotted, was $98 on the SME auction and $99 on the main auction. The top accepted and allotted bid on both auctions was $120. This gave a bid band of 19,87 percent, meaning the top bidder paid that much more for their foreign currency than the bottom bidder who managed to obtain a significant bargain.
This week was the first under a new system that required bidders to have their bids, with the supporting documents, with their bankers four business days before the auction and the bankers to get these to the Reserve Bank three business days before the auction.
The Reserve Bank introduced the new system because of a growing belief that some bidders were coming into the auction even though they were not fully eligible to do so and the Reserve Bank wanted more time to make the required checks. These are basically to ensure that all exports and previous imports are accounted for and that a bidder has used up all their own foreign currency before bidding for more.
The Reserve Bank seems to have been justified in its suspicions considering the high percentage of bids that were rejected for not meeting the basic rules.
This is different from a bid being accepted by being too low to make the cut off for allotment. In fact all accepted bids this week were allotted currency.
But 203 of the 623 bids on the main auction failed the acceptance test, a much higher percentage than has been seen since the early days of auctions last year when bidders were still getting used to the system. In the SME auction 188 of the 881 bids received were rejected, a smaller percentage. Normally one would expect that the major bidders on the main auction, having potential access to better financial services, would be more likely to have their bids following the rules and the fact that this was not so suggests that the RBZ found a lot of deliberate flouting.
The amount allotted was just under US$42 million, roughly in line with usual weekly allotments. The 420 valid bidders on the main auction received US$36228 651,92 and the 693 valid bidders on the SME auction received US$5 520 498,32.
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