Slight increase in forex alloted to business
THE Reserve Bank of Zimbabwe (RBZ) has this week allotted US$20,9 million to businesses at the foreign currency auction system, a slight increase from US$20,1 million allocated last week while the local currency has further lost grip against the United States dollar.
Reserve Bank of Zimbabwe (RBZ)
In a trading update, the central bank said after this week’s auction, a total of US$18,6 million was allotted to the main auction and US$2,3 to Small and Medium Enterprises (SMEs).
The main auction accepted bids worth US$19,1 million while the SMEs platform accepted US$2,4 million.
Since the establishment of the platform in June 2020, the bulk of the foreign currency has been allotted towards the procurement of raw materials, machinery, and equipment.
A total of US$9,9 million went towards the procurement of raw materials while US$3,3 million was channelled towards the procurement of machinery and equipment in the main auction.
In the SME category, US$642 960 went towards raw materials while US$949 651 was for machinery and equipment procurement
Money – Image taken from Pixabay
The Central Bank introduced the auction platform to improve productive sector accessibility to the much-needed forex.
The auction system continues to provide affordable and easily accessible foreign currency to the productive sector in a bid to reduce production costs and promote industrial growth as this reduces sourcing of forex from the illegal forex market, which manipulates exchange rates.
The introduction of the foreign currency auction system, consolidation of monetary policy reforms, and fiscal incentives are some of the interventions that have aided industry recovery despite the disruptive impact of Covid-19 in the last two years.
However, the Confederation of Zimbabwe Industries (CZI) has been lobbying the Government to transform the willing buyer-willing seller market into a market-determined exchange rate to promote an enabling environment for businesses.
The largest industry lobby body is of the view that if the financial platform is adequately fine-tuned, it has the potential to curtail the parallel market distortions through a market-determined exchange rate.
Economists have also been calling upon the Government to fund the production as a way to boost local currency and increase exports of manufactured goods.
They also said there is a need to increase exports, especially from the mining sector which is the only natural resource that must be used to gain a comparative advantage in international trade and finance. — chronicle
