Oliver Kazunga, Senior Business Reporter
THE Foreign Currency Auction Trading System introduced by the Reserve Bank of Zimbabwe started operating Tuesday with an exchange rate of US $1: ZWL$57,3 replacing the fixed interbank market rate of US$1:ZWL$25.
The Forex Auction Trading System will be conducted on weekly basis to determine the Zimbabwe dollar exchange rate.
RBZ introduced the fixed exchange rate at the end of March this year in an attempt to stabilise prices of goods and services on the market following the outbreak of the Covid-19 pandemic.
Information from RBZ indicate that a total of US$10,3 million was alloted at the auction system with an average weighted price of ZWL$57,3582 against total bids amounting to US$11,4 million.
A financial analyst, Mr George Nhepera, said what this means is that the new exchange rate for the next one week will be pegged at US1:ZWL$57,3.
“The new exchange rate is now $57,3 and this shall apply on pricing of goods and services in shops including foreign currency transactions in the banking sector,” he said.
Players in industry and commerce are cautiously optimistic that the platform would enhance transparency and efficient distribution of foreign exchange.
It is hoped that if the new platform works, it will help build market confidence, improve access to foreign currency and help stabilise the exchange rate while speculative activity on the parallel market that have of late gone heywire significantly subsiding.
Prior to the introduction of the Forex Auction Trading System, the runaway parallel market had gone up to US$1:ZWL$90 or above.
At Tuesday’s auctions, the forex that was sought by individuals and companies was for meeting fuel, raw material, medicals, food and beverages and services needs, among other requirements.
This week’s auctions were for selling the foreign currency retained by exporters, which must either be used or sold within 30 days at the discretion of the exporter or be subject to compulsory sale after 30 days.
Under the foreign currency auction system, bids will be submitted to, allotted and evaluated by RBZ with the offers for foreign currency while bids from buyers are submitted in the morning every Tuesday.
The auction will only accept bids of a minimum of US$50 000 and a maximum of US$500 000 with individuals and firms required to make a single bid per week through an authorised dealer.
However, the ruling rate established during the weekly auction will be the rate for smaller sales and purchases of foreign currency during the week before the next auction.