By Alois Vinga
THE movement of bidding rates on the Reserve Bank of Zimbabwe Foreign Exchange Auction this week revealed signs of further weakening of the Zim$ but market watchers still maintain it’s within safe margins.
A closer look at this week’s trading update shows that on the SMEs Auction, a total 255 bids were received out of which bidding rates reached a high of ZWL1 015 and a low of ZWL928,58 against the greenback.
Similarly on the Main Auction platform, the number of bids received reached a high of ZWL1 020 and a low of ZWL927 against the US$.
The official rate closed the day at ZWL928: US$1 compared to the parallel market rate which currently stands at ZWL 1 200 as the widely accessible premium up to a high of ZWL1 400 on the highest end.
However, market watchers believe that the fluctuations in the bidding rates margins indicate the appetite of the Auction system trends in the quest to align with realistic market trends amid assurance that the waning of the local currency is within the sustainable range.
Allotments made this week were tilted in favour of supporting productivity with raw materials ,machinery and equipment dominating the list on the SME Auction after receiving US$ 794 513 and US$ 794 513 respectively.
The platform received US$2, 5 million.
On the Main Auction platform, raw materials received US$9,2 million, machinery and equipment US$3 million consumables US$1, 2 million and services US$927 561.
The total allotted on the platform was US$ 17, 7 million.
Economist Persistence Gwanyanya said this week’s Auction coincided with key decisions reached by the Monetary Policy Committee (MPC).
“The MPC considered the factors causing recent depreciation of the exchange rate which the policy maker is also seized with. The whole idea is to maintain stability but you would realize that each time contractors are paid there is a weakening of the local currency.
“So going forward there is need to balance between payment of contractors and the need to safeguard local currency depreciation,” he said.
Gwanyanya underscored that some factors contributing to the depreciation are beyond liquidity management especially ahead of elections where citizens are under pressure to acquire the US$.
“But when compared to previous years, inflation and exchange rate depreciation has been adequately managed this time around,” he added.
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