THE Reserve Bank of Zimbabwe (RBZ) has shot down proposals from the Confederation of Zimbabwe Industries (CZI) that the auction floor price be set at $5 800 against the United States doll
The CZI said it believed this rate would be attractive to exporters and warned that if the rate was not adjusted this would lead to consumptive demand for foreign currency.
On the auction market the greenback is selling at $3 612, after having depreciated from $4 900 when the auction began on Monday last week.
In the proposals CZI argued that the success of the controlled auction system would be significantly enhanced if the auctions “get off to a good start”.
CZI’s proposals were based on the central bank’s gold purchasing price.
In their proposals, which have been sent to the central bank the industrial representative body said since the central bank is buying gold at $6 000 per gramme while the international gold price is “approximately” US$13,15 per gramme, this implied an exchange rate of $4 652 against the US dollar.
“For exporters to net that exchange rate after surrendering 25% at 800 to the US dollar the floor price must be $5 816,” CZI said.
“As CZI we recommend the floor price of $5 800 based on the above calculation because it provides a rate which is attractive to exporters and will help drive export growth.”
The CZI said the suggested floor price would help contain inflation.
The new auction system allows foreign currency to be auctioned through a currency exchange.
The exchange is an independent body which operates under the supervision of the central bank.
The system also matches foreign currency buyers and sellers at the auction market with buyers setting the price as this prevents sellers from taking advantage of limited supply to charge excessive rates.