Harare, (New Ziana) – The Reserve Bank of Zimbabwe (RBZ) said on Wednesday US$639.5 million has been allocated to over 100 companies at the foreign currency auction since its inception at the end of June last year.
Introduction of the auction system saw the country dumping its then fixed exchange rate of ZWL$25 to US$1.
Since then, the rate has moved to $83.98 through market price discovery, although there are murmurings by some market players who feel the central bank is tampering with it.
The official exchange rate has however continued to trail the black market, with the gap gradually widening overtime.
Currently the unofficial rate is ranging between $115 to as high as $120.
RBZ Governor, Dr John Mangudya said the auction system had continued to grow in the eight months of its existence.
“The foreign exchange auction system which was introduced by the Bank on 23 June 2020 has been successful in achieving price stability in the national economy,” he said, revealing the names of some companies that have benefited from the auction.
“The success has been achieved through market price discovery of the exchange rate and provision of a dependable foreign exchange market.”
Before the auction system was introduced, companies mostly got their foreign currency from the black market, at a premium.
From under 100 bids valued at US$11 million at inception, the auction now records over 500 bids with the value of bids having quadrupled.
Bids are allotted according to an agreed national priority list, which seeks to ensure continued support for productive sectors of the economy.
While the top 100 companies accounting for 45 percent of allocations at the auction were named, the central bank however bundled firms that accounted for 55 percent of the allotments without identifying them.
In terms of the foreign currency distribution, the top company has received 1.9 percent (US$12 million) of total allotments while the lowest in the top 100 has received 0.2 percent (US$1.429 million).
Top 10 beneficiaries include Cangrow Trading, Stanbic Investor Services, Blue Ribbon Foods, Surface Wilmar, National Foods, Varun Beverages, Sable Chemicals, Zimbabwe Brands and Windmill.
Dr Mangudya said at least 12 companies had been banned from participating at the auction system for breaching set rules while 62 are under the Financial Intelligence Unit’s watch.
He warned banks, which are key players in the auction system, from fraudulently backing bids of companies that do not have the equivalent local currency in their accounts from participating at the auction.
“Where absolutely necessary, bank lending should be limited to a maximum of 50 percent of a bid. Under these exceptional circumstances, bidders would be required to have in their accounts a minimum balance equivalent to 50 percent to cover their bids,” he said.