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Business Reporter
THE weekly foreign currency auction system has set the official exchange rate at US$1:ZWL$72,1 as of yesterday with the lull in parallel market activity showing that Government took the right action in reining in illicit mobile money transactions.

Government recently suspended all bulk monetary transactions on phone-based mobile money agent platforms to facilitate investigations aimed at arresting and prosecuting people responsible for sabotaging the economy.

The measures included temporary suspension of trading on the Zimbabwe Stock Exchange (ZSE) where some counters such as Old Mutual, were being used as bench mark to speculate and fuel parallel market distortions.

This was after parallel market activity ran amok thereby distorting the exchange rate which was largely to blame for the escalation of prices of basic commodities.

The distortions were working against Government’s prudent fiscal and monetary policy measures which have seen Treasury trim budget deficit and keeping money supply growth under check.

Posting on his official Twitter handle yesterday, Information, Publicity and Broadcasting Services Permanent Secretary Mr Nick Mangwana said: “Government’s action against mobile money platforms is vindicated by the lull in parallel market activity, which until then was running riot.

“While our dollar is not yet exactly where it should be, there is some stability there. It’s clear what these companies were up to.”

Last month, the monetary authorities announced the introduction of the Foreign Exchange Auction Trading System, which replaced the fixed exchange rate. This week’s exchange rate is $1:ZWL$72,1 up from last week’s US$1:68,89. Analysts believe the narrowing gap between the parallel market rates and the auction rate is stabilising prices and controlling inflation.

The banks and other private sector players have endorsed the auction model and believe it has performed well in stabilising the exchange rate and setting realistic prices.

Bankers Association of Zimbabwe president Mr Ralph Watungwa on Monday said it was their view that the system has brought transparency and efficiency in the trading of foreign currency.

“The introduction of the auction system has been one of the key recommendations of BAZ’s regular inputs to the monetary and fiscal authorities. Our view is that the system brings transparency and efficiency in the trading of foreign currency,” said Mr Watungwa.

Under the new system bidders are required to submit one bid per auction.