News / Local
'Reserve Bank of Zimbabwe's forex auction shutdown inconsequential'
14 Dec 2022 at 06:39hrs | Views
THE end of year closure of the Reserve Bank of Zimbabwe (RBZ) foreign exchange auction for close to a month will not affect the market because most companies are self-sustaining, analysts said yesterday.
The RBZ on Monday announced that it was closing its weekly foreign exchange auction until January 9, 2023..
In an interview with NewsDay, economic analyst Gift Mugano said the closure of the auction platform would be insignificant.
"Mainstream imports by businesses are coming from companies' own foreign currency generation at various levels. Because of the dollarisation, companies are generating their own foreign currency through sales, they are self-sustaining. In my view, I don't see any effects of the closure of the auction system," Mugano said.
Another economic analyst Prosper Chitambara weighed in saying the closure will not have any effect.
"It is not going to affect the market much as most actors in the economy are going to close for the holiday, so I think the time will coincide with annual shutdowns by most businesses," he said.
The official exchange rate as of last week stood at US$1:$661, while the parallel market rate was hovering between US$1:$900 and $950.
Government introduced the foreign currency auction in 2020 to address instability in the local currency market and help tame high inflation.
Statutory Instrument 127 of 2021 stipulates that foreign currency seekers are expected to use money sourced from RBZ auction system for intended purpose. Companies that obtain money through the RBZ auction and misuse it risk being fined.
The RBZ on Monday announced that it was closing its weekly foreign exchange auction until January 9, 2023..
In an interview with NewsDay, economic analyst Gift Mugano said the closure of the auction platform would be insignificant.
"Mainstream imports by businesses are coming from companies' own foreign currency generation at various levels. Because of the dollarisation, companies are generating their own foreign currency through sales, they are self-sustaining. In my view, I don't see any effects of the closure of the auction system," Mugano said.
"It is not going to affect the market much as most actors in the economy are going to close for the holiday, so I think the time will coincide with annual shutdowns by most businesses," he said.
The official exchange rate as of last week stood at US$1:$661, while the parallel market rate was hovering between US$1:$900 and $950.
Government introduced the foreign currency auction in 2020 to address instability in the local currency market and help tame high inflation.
Statutory Instrument 127 of 2021 stipulates that foreign currency seekers are expected to use money sourced from RBZ auction system for intended purpose. Companies that obtain money through the RBZ auction and misuse it risk being fined.
Source - Newsday Zimbabwe
