Zimbabwe’s Currency Weakens Slightly Following RBZ Foreign Exchange Auction

by Oluwatosin Alabi

The Zimbabwean currency, the ZWL, experienced a minor slump of 0.75% following the recent Foreign Exchange Auction by the Reserve Bank of Zimbabwe (RBZ). This drop comes amidst a significant allotment of foreign currency to Zimbabwe’s primary economic sectors.

A report released Tuesday revealed a depreciation in the exchange rate to US$1: ZWL 5,633, down from ZWL5,591 observed last week, marking a 0.75% decrease. As a result, traders can now set the US dollar at a peak of ZW$6,196, accounting for the -/+ 10% variation from the official exchange rates.

Despite this, exchange rates appear to remain consistent, maintaining proximity to parallel market rates where US$1 trades for ZW$6,500. Yet, some parallel market participants set even higher rates based on demand.

Notably, the Wholesale Auction platform, where banks procure foreign currency for client sales, saw 17 bids and allocated US$18.1 million, slightly below the available US$20 million.

Analysts suggest that such trends indicate well-regulated liquidity levels in the market, given that not all available foreign currency gets purchased at the Auction.

On the Retail Auction platform, allocations reached a total of US$1.86 million. The breakdown includes US$552,534 for raw materials, US$468,099 for machinery and equipment, and smaller amounts for consumables, services, and retail distribution, among other sectors.

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