No joy for forex bargain hunters

Bargain hunters at yesterday’s foreign currency auctions missed the allotment cut with the US$11,7 million of bids below $82 not allotted and as a result the exchange rate moved marginally by three quarters of a percent to $82,67 from $82,08 to the United States dollar.

Of the just over US$28 million that was allotted, large corporations accounted for the bulk of allocations at US$26,04 million and the SMEs segment accounted for US$1,96 million, which was significantly lower than what had been requested on both sides.

Big corporates had made valid bids of US$37,1 million and SMEs valid bids of US$2,62 million, but after several weeks of the lowest allotted bid being $80, and this was the case again yesterday, the allotment cut off moved to $82 while the top bid moved less, from US$86 to US$87, so the bid range was narrowed.

The allotment schedule showed that a large chunk of bidders were putting in bids below last week’s rate, with only a few bidding above that rate.

As per trend, the raw materials segment accounted for the bulk of allotments at US$12,4 million on the main auction and US$558 018 on the SMEs section.

Machinery and equipment came in second with US$4,12 million on the main and US$489 125 on the SMEs section.

And consumables came in third on the main auction at US$1,73 million, but on the SMEs section, consumables took up US$393 958.

With the central bank soon to give its first Monetary Policy Statement (MPS) for 2021, expectations are that the authorities could introduce additional measures to support the foreign currency auction system, which has brought about pricing stability since June last year.

Earlier this month, the RBZ announced that exporters were no longer compelled to sell for local currency unused export receipts after 60 days, but now have to sell an average of 40 percent of export earnings to the central bank as soon as the money arrives in Zimbabwe, up from the previous 30 percent.-herald.cl.zw