ZWL salaries, suppliers payments spur US$ demand on RBZ Auction – NewZimbabwe.com

By Alois Vinga

THE demand for the US$ has surged on the Reserve Bank of Zimbabwe (RBZ) Foreign Exchange Auction on the back of civil servants’ salaries and payments to government contractors.

A trading update released at the close of business Tuesday shows that the total amount allotted on the Wholesale Auction was US$15, 9 million. Bids submitted on the platform during the day had a total of US$17 million with just US$16 million on offer.

Resultantly, the value of the ZWL weakened slightly to US$1: ZW$4 542 from a premium of ZW$4 517 signifying a 0, 55% decrease.

On the Retail Platform, a grand total of US$497 893 was allotted with priority going towards supporting productivity-related needs.

As a result, Raw materials were allotted US$128 132, machinery and equipment US$282 872, Services US$69 961, Retail and Distribution US$49 618, Paper and Packaging US$17 803.

Economic analyst, Persistence Gwanyanya said the surge in demand for foreign currency is a direct reflection of developments in the economy.

“After weeks of depressed demand for forex, the value of bids on the wholesale auction system doubled from the previous month’s average allotments. The increase in bid reflects the effects of payments to civil servants for salaries as well as payments expended to suppliers,” he said.

He however allayed fears of critical US$ shortages due to the fact that the demand for the ZW$ is coming at a time when some companies are volunteering to liquidate their foreign currency stocks.

“Besides the US$20m offered by RBZ on the wholesale auction system per trading session, there has been an increase in interbank trade in line with voluntary liquidations.

“Recently, the Treasury reported voluntary liquidations of US$110m against their injection of US$67 million into the market,” he added.