By Alois Vinga
THE ZW$ has once again firmed up by 3, 69% against the greenback for the second time in a week on the back of swift responses to the raft of measures employed by the Treasury.
A trading update released by the Reserve Bank of Zimbabwe (RBZ) at the close of the second Wholesale Auction Thursday shows that the official rate recovered to US$1:ZW$ 4 537 from the rate of US$1:ZW$4 711 set by the Auction platform on Tuesday to signify a 3,69% recovery.
The Wholesale Auction is a platform where banks purchase foreign currency for onward disposal to their clients.
A total of 13 bids were accepted and subsequently allotted US$5, 7 million leaving a surplus of US$14, 3 million from the whooping US$20 million which was on offer.
Again, the failure by banks to purchase the available foreign currency testifies to the fact that authorities are maintaining a tight grip on the money supply in a development that has also seen the ZW$ recording significant recoveries on the parallel market.
Accordingly, traders are therefore expected to peg the greenback at a maximum of US$1: ZW$5 090 after factoring in the -/+ 10% above the official rate range.
During trades, the highest bid rate reached ZW$4 711 and a low of ZW$4 450 against the greenback.
Economic Analyst Doctor Prosper Chitambara attributed the recovery to the authorities’ boldness in sticking by their word.
“The commitment to place a hold on liquidity injection into the market by authorities is bearing dividends. The current stability we are seeing in the markets is, therefore, a direct result of the tight leash being maintained on the country’s liquidity position,” he said.
He however said the situation is likely to remain the same until elections are held hinting that, thereafter there will be a need to find ways to release pressures mounting from contractors’ failure of which may trigger fresh problems.
“Now ordinarily, prices cannot shift as fast as the exchange depreciation does because they are sticky downward,” he added.
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