RBZ resumes forex auction

The Chronicle

Sikhulekelani Moyo, Business Reporter
THE weekly Foreign Currency Auction Trading System resumed activity this Tuesday after the festive season break with the Zimbabwe dollar trading at 112,82 against the United States dollar.

The Reserve Bank of Zimbabwe (RBZ) closed the auctioning of forex on December 14 with the exchange rate pegged at 108,7 as most companies had closed for the festive season.

However, the weekly auction system that was initially planned to resume trading last week Tuesday but authorities citied Covid-19 induced delays.

In an update, RBZ indicated that a total of US$30,866 million was allotted at the first auction this year compared to US$41,8 million allotted to bidders at the last auction of 2021.

As has been the tradition, the bulk of the resources was yesterday allocated to firms for raw material procurement with a total of US$10,955 million allotted through the main auction.

Also, for raw material procurement, US$1,437 million was disbursed to companies through the Small and Medium Enterprises (SMEs).

RBZ end of year report on foreign currency disbursement, the bank indicated that through the course of the year 2021, 62 percent of the foreign currency was allotted to raw material procurement followed by machinery and equipment procurement.

Other purposes for which the companies at the auction system were allocated foreign currency were machinery and equipment acquisition, sourcing of consumables like tyres and electricals as well as facilitating services such as loans, education, dividends, and disinvestments.

At yesterday’s auction, the SMEs auction accepted 492 bids while 141 were rejected.

The main auction received a total of 448 bids from which 320 were allotted.

Since its commencement on June 2020, the official forex trading platform has been applauded for helping the growth of the production sector through increased formal access of scarce forex resources averaging US$40 million per week.

The auction system was introduced to improve access to foreign currency by the productive sector of the economy as prior to the platform companies sourced forex from the parallel market where it was inordinately priced.

Last year close to US$2 million was allotted to 7 325 big and small business organisations through the RBZ forex auction.

However, other players have raised concern on the time it takes for them to receive foreign currency from the forex auction highlighting that it was taking them 8 to 9 weeks to get forex, a situation which created a growing backlog.

Monetary authorities have vowed to deal with the concerns raised on the platform.

Finance and Economic Development Minister Professor Mthuli Ncube is on record saying Government was working to make sure that the platform is adequately resourced and that relevant authorities enhance efficiency within the system.


Article Source: The Chronicle

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