93% forex bids rejected

Eric Chiriga/Rodwin Chirara

THE Reserve Bank of Zimbabwe rejected 93% of foreign currency bids on its auction floors last month.


Th

is is a sharp rise from a rejection rate of 88% in December last year.


“Against a fixed allotment of US$11 million per auction, the total amount of bids on the foreign currency auction market rose from US$29,4 million on January 3, to US$80,8 million on January 27, 2005,” Finhold said in its monthly economic update for February. This reflects a huge deficit for importers.


However, the bids declined sharply to US$37,7 million on January 31.

The weighted average auction rate fell from about US$: $5 735 at the beginning of January to $5 957 on January 31, representing a depreciation of 4%.


Finhold said during the month of January, the Zimbabwe dollar depreciated by an average of 6% against a basket of six major trading partner currencies comprising the British pound, the Euro and Botswana pula among others.


“The Zimbabwe dollar fell by 8%, 7% and 6% against the Japanese yen, British pound and South African rand, respectively.”


In December, the Zimbabwe dollar depreciated by 18% and 11% against the South African rand and Botswana pula on the foreign currency auction.


This is contrary to government claims that the country’s currency is firming and the economy is recovering.


Finhold however said the money market recorded daily average shortages of $370 billion in January, from $660 billion recorded in December 2004.


This was underpinned by an injection of about $700 billion in the form of Treasury bill maturities.

Top