RBZ disburses US$93m to 788 beneficiaries in two months

THE Reserve Bank of Zimbabwe (RBZ) disbursed US$93 million to 788 firms and individuals in June and July under the foreign exchange auction system with several Bulawayo based entities benefitting

Added to that, a total of US$15,7 million was sold to 746 beneficiaries comprising companies and individuals under the Interbank foreign exchange market in the two months under review, June and July 2023.

The auction system was introduced in June 2020 to improve productive sector accessibility to the much-needed foreign currency.

Companies or businesses in the productive sectors such as mining, agriculture as well as agro-industrial sector need foreign currency to import critical raw materials, consumables, machinery and equipment, among others.

Central Bank Governor, Dr John Mangudya, who issued the monthly allocations update, said; “In line with its commitment to regularly keep the public informed of developments in the foreign exchange market, the Bank hereby advises that foreign currency payments amounting to US$93 million from funds allotted under the wholesale Foreign Exchange Auction were made on behalf of 788 beneficiaries comprising companies and individuals during June and July 2023.

Dr John Mangudya

“A total of US$15,7 million was sold to 746 beneficiaries comprising companies and individuals under the Interbank foreign exchange market in June and July 2023.”

Since its inception in June 2020, the central bank has allocated US$4,09 billion to the foreign currency auction system representing 85 percent of the total bids submitted.

A total of US$382,3 million was allocated to the system in the first seven months of the year.
In his 2023 monetary policy review statement released last week, Dr Mangudya said the foreign currency auction system remains a critical source of foreign currency for the economy.

“We shall continue with the current auction system in place and further liberalise the use of foreign exchange from the wholesale auction system by allowing banks to meet bonafide small foreign payment requirements for their customers, including individuals and Micro, Small and Medium Enterprises (MSMEs) in order to enhance financial inclusion.”

Further liberalisation of the foreign exchange market use remains as key component in reducing the parallel market rate premium and achieving rate convergence.

In its commentary on the 2023 Midterm Monetary Policy Review statement, FBC Securities noted that the liberalisation of the foreign exchange market facilitates the distribution of foreign currency through formal channels thereby limiting the need to use parallel market sources.

Reserve Bank of Zimbabwe (RBZ)

On June 7, 2023, the central bank further liberalised the foreign exchange market and introduced the Wholesale Foreign Exchange Auction in a bid to strengthen the interbank foreign exchange market under the Willing-Buyer Willing-Seller (WBWS) arrangement.

Under this arrangement, RBZ auctions foreign exchange to authorised dealers at market-determined exchange rates for them to onward sell to their customers.

Since inception, about 12 wholesale auctions have been held with banks submitting bids of around 32 percent of the amount on offer, largely due to the tight local currency liquidity conditions prevailing in the market.

RBZ has to date allotted US$95,85 million under the Wholesale Foreign Exchange Auction, representing 91 percent of the total bids submitted.-chronicle