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Thursday, June 8, 2023

RBZ refines foreign exchange auction

Story by Stanley James, Business Editor

THE Reserve Bank of Zimbabwe (RBZ) is refining the auction system by announcing the amount available for allotments ahead of a weekly Foreign Exchange Auction system to enhance confidence and sustain the requirements of industry and commerce.

The latest move is in direct response to the industry’s proposals for an efficient auction that creates a price discovery mechanism and avoids backlog on settlements and market distortions.

In a statement released this week, RBZ Governor Dr John Mangudya revealed that US$15 million has been set aside for allotments ahead of the weekly auction on Tuesday next week.

Business representative organisations have described the central bank intervention in refining the auction as key towards restoring confidence and enabling beneficiaries to get allotments on time.

“We welcome the decision announced by the Reserve Bank in terms of pre-announcing the size of the envelope, this is a follow-up to the stabilisation measures that were announced by the minister of finance and this is also in line with the calls by the industry that before bids are allowed to come the size of the envelope must be announced,” said Confederation of Zimbabwe Industries president, Mr Kumbirai Matsheza.

“The refinement of the foreign currency auction system by the Reserve Bank of Zimbabwe is a welcome development, one of the key characteristics of a foreign currency auction system is transparency,” said Zimbabwe National Chamber of Commerce president, Mr Mike Kamungeremu.

The foreign currency auction system which was introduced by the central bank in June 2020 is among the Second Republic’s strategies towards allocating foreign currency to key productive sectors.

It has benefited several sectors with the manufacturing industry dominating allotments leading to growth in output, capacity utilisation and increased availability of locally produced goods in retail markets.

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