Zim-dollar remains stable

THE Zimbabwe dollar continues to maintain stability on the official weekly foreign currency exchange auction system with marginal fluctuations against the greenback exhibiting market confidence in the local currency.

This Tuesday the local dollar traded at 84,39 against the United States dollar from 84,40 last week. However, a total of US$25,3 million was awarded to bidders, much lower than last week’s US$35,7 million.

According to the Reserve Bank of Zimbabwe (RBZ) latest regular update, a total of 334 bids were allotted at the main, and Small to Medium Enterprises (SMEs) auction platforms.

The bulk of the forex that companies sourced continued to be driven by critical raw materials where upon firms require to meet their production processes.

A total of US$11,6 million was for raw materials procurement while US$5 million was for machinery and equipment.

Consumables and other electrical accessories got US$2,1 million and US$1,6 million went to the retail and distribution services.

Financial markets analyst, Mr George Nhepera, attributed the decline in the amount allocated to companies at the auction floors to Easter Holidays’ break.

“The decline could have been related to the timing period of the auction being held shortly after the holiday when major industries had been closed,” he said.

“The reduction in the allocated amount is not a cause of alarm, for it was able to meet the demand of foreign currency by the importers without changing much the exchange rate.”

The auction platform was introduced last year in June to improve the productive sectors’ accessibility to foreign currency for the procurement of critical raw materials.

Companies participating at the auction system have also been able to procure essential and strategic imports such as pharmaceuticals and chemicals, fuel and electricity.

Last month, the Reserve Bank of Zimbabwe announced that close to 800 companies have benefited from the weekly foreign trading system with a total of US$639,5 million having been allotted since the introduction of the platform.

The RBZ list indicated that 788 large corporates and SMEs in different productive sectors of the economy had secured forex from the auction system to import critical raw materials and equipment.

The bulk of the companies that have benefited from the auction system were companies in the agro-industrial sectors such as the Bulawayo-based United Refineries Limited and Olivine Industries, among others.-heraldcl.zw