THE Reserve Bank of Zimbabwe (RBZ) has rejected more than 85% of foreign currency bids submitted at its auction floors over the past month, a trend which shows that there
is still a critical shortage of foreign currency despite government’s claims to the contrary.
The auction system, introduced amid much fanfare earlier this year, has been battling to raise enough foreign currency to meet the country’s requirements.
The number of rejected bids continues to rise on the back of the country’s waning export revenues. Less than 15% of the 9 922 bids submitted at the auctions last month sailed through for foreign currency allocation.
About 8 542 bids (85% of the total submitted last month) were rejected without explanation by the central bank. The rejected bids include those from large importing companies and individuals.
The auction has been giving out an average US$10 million instead of the US$375 million required by the market – as reflected by the average total bids.
Figures from the central bank show that the market is bidding for an average US$50 million per auction but the RBZ can only provide US$10 million – leaving the other bidders to fend for themselves on the flourishing parallel market.
The perennial shortage, analysts say, is compounded by the fact that the local currency had remained unchanged against major currencies, forcing traders to seek lucrative deals on the parallel market.
The RBZ insists on pegging the value of the dollar despite the widening gap between the auction rate and the parallel market rate.
The fragile Zimbabwe dollar is trading at around $7 500 against the United Sates dollar and $13 700 against the British pound.
The local currency has also lost ground against regional currencies trading at $1 250 against the South African rand.
The central bank has maintained the exchange rate at $5 616 against the greenback, $10 077 versus the pound and just under $900 against the rand.
Meanwhile, black market trading continues unabated at spots dotted around the city of Harare and Bulawayo. A visit by businessdigest to Road-Port, Harare’s major forex black market, shows that the police are struggling to curb the informal trade of foreign currency.
There is also a large group of informal traders doing their business at Eastgate.