Forex auction resumes, exchange rate widens to US$1:705

THE Reserve Bank of Zimbabwe (RBZ) auction system resumed on Tuesday with the official exchange rate pegged at $705 to the United States dollar and US$10 million allocated to companies.

The auction system closed in mid-December for the festive holiday season but the willing buyer, willing seller market was, however, opened throughout the holiday period.

The willing buyer willing seller system came into effect in May last year as one of the measures by the Government to arrest inflation.

The measure has been commended by the business community as it has stabilized the exchange rate by mopping up the excess liquidity, which has created demand for the local currency.

In a trading update, the central bank said after this week’s auction, a total of US$10, 806 million was allotted. At this week’s auction, the main auction was allotted US$13,141 million while the Small and Medium Enterprises (SMEs) got US$1.001 million.

A total of US$6,210 million went to the procurement of raw materials and US$1.016 million was channeled toward the procurement of machinery and equipment in the main auction.

In the SME auction, US$275,169 went towards raw materials and US$213,566 million was for machinery and equipment procurement.

At the last trade in December, RBZ allotted a grand total of US$15,5 million to the auction system with US$14 million being allotted to the main auction and US$1,5 allocated to small and medium enterprises.

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.-chroni le.cl.zw