HomeBusiness DigestForex at auctions increased

Forex at auctions increased

Godfrey Marawanyika

THE Reserve Bank of Zimbabwe (RBZ) has reviewed upwards the amount on offer on the foreign exchange auction system.

rif”>This is the sixth time the central bank has done so since the system was begun on January 12.

When the auction system began the amount on offer from the auction system was US$5 million but reviewed a week later to US$7 million.

The amount was subsequently reviewed to US$8 million on January 29. At the beginning of May the amount was increased to US$8,5 million but since last week it has been reviewed to US$9,5 million.

The review by the central bank has been largely caused by the huge demand from both exporting and importing firms.

The auction system was introduced after recommendations from the Confederation of Zimbabwe Industries (CZI).

It was proposed to ensure that foreign currency finds its way into the official market to enable firms to be able to access it easily through a bidding process.

Although the central bank has reviewed its amount on offer upwards, the number of bids has also increased from US$25 078 801 as of June 21 to US$29 401 738 on June 24.

The bids eventually went down to US$25 775 994 on Monday.

The auctions are conducted on Monday’s and Thursday’s.

An analyst, who participates on the bidding process, however said although the central bank had reviewed the amounts on offer the demand for foreign currency had increased.

“When the auction floors resumed this week a total of 499 bids were rejected, up from 431 when they closed last week,” he said.

“The high rate of rejection also signifies the high demand for foreign currency by both industrialists and even consumers at times. However, there seems to be great suspicion that the bids are being rejected to maintain the exchange rate at $5 300 to the greenback.”

Since 1999 Zimbabwe has been facing an acute shortage of foreign currency, which resulted in firms and individuals accessing their money on the black market, while others were accessing and changing their money from bureau operators.

Bureaux de change were subsequently closed by government, which it blamed for the hoarding and hemorrhaging of foreign currency.

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