Zim dollar further depreciates against USD
Harare, (New Ziana) – The Zimbabwean dollar depreciated 11 percent against the greenback to $63.74 on Tuesday, the second week of the currency’s free float.
The government unpegged the local currency last week, which saw the Zimbabwe dollar devalue by more than 50 percent against the US dollar to $57.36.
Until then, the Zimbabwe dollar had been pegged at $25 to the greenback, a rate which infuriated exporters and spurred the black foreign currency market.
This forced the country’s monetary authorities to re-introduce the currency’s free float last week via weekly forex auctions.
The auction system sets the average weighted average from bidders and sellers as the ruling exchange rate for the week.
While the rate has gone up in a move lauded by exporters, it still trails the parallel market rate which is running at between $80 and $100 per greenback depending on the method of payment.
In Tuesday’s auction, the highest bid was $92 while the lowest was $37.82.
Total bids amounted to US$18.96 million while US$16.32 million was allotted.
Almost half of the allotted amount, US$7.2 million, will go towards importation of raw materials and consumables such as spares, packaging and tyres.
Food and beverages, agriculture and chemicals got allocations of slightly over US$1 million.
Medicals, machinery and equipment as well as gas got the remainder of the funds.
The RBZ has said the new system “is expected to bring transparency and efficiency in the trading of foreign currency in the economy.”
Allocation of the scarce foreign currency is however based on the country’s import priority list.
“Bids which were not eligible in terms of the priority list were disqualified, whilst some were allotted on a pro rata basis,” the central bank said.
Those wishing to buy hard currency on the auction are expected to present one bid per auction of a minimum of US$50 000 and maximum of US$500 000.
Analysts have however noted that the existence of the import priority list will mean the parallel market, which government is trying to get rid off, will still thrive as those not on the list will hunt for the foreign currency elsewhere.