The Sunday News
Judith Phiri, Business Reporter
The Reserve Bank of Zimbabwe (RBZ) says it has cleared the backlog of foreign exchange allotments under the foreign exchange auction system.
In a statement on Thursday, RBZ Governor Dr John Mangudya said this was as a result of improved foreign exchange inflows.
“The Reserve Bank of Zimbabwe (the Bank) is pleased to advise the public that it has cleared the backlog of foreign exchange allotments under the Foreign Exchange Auction System. This development is a result of improved foreign exchange inflows in the Country,” said Dr Mangudya.
“Going forward, the Bank will abide by the Foreign Exchange Auction Rules and ensure that foreign currency is available to successful bidders within 14 days from the date of auction. This will go a long way in maintaining a stable foreign exchange rate and sustaining financial stability in the economy.”
The auction system was established as a price discovery mechanism for the local currency as well as availing much-needed foreign currency to local companies for production at a time the country was experiencing foreign reserves challenges.
The RBZ has allotted US$3,7 billion through the foreign exchange auction system since its introduction in June 2020 to December last year, with the bulk of it channeled towards the importation of raw materials and machinery.
The central bank plans to keep running the auction system as a platform to allocate foreign currency to the productive sectors of the economy.
Despite the willing-buyer-willing-seller platform now being used as the platform to determine the official exchange rate, the apex bank, in its last Monetary Policy Committee meeting, resolved to “enhance efficiency in the operation of the foreign exchange auction system”.
Last year’s allocations stood at about US$1,1 billion, according to the central bank.
The auction system ended the fixed exchange rate put in place following the introduction of the local currency in 2019 after a decade of multi-currency regime dominated by the US dollar, which was generally referred to as dollarisation.
Until mid-last year, the auction was the major source of foreign currency for local companies when the Government introduced the willing-buyer-willing-seller (WBWS) platform.