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Zimdollar continues to depreciate against the dollar

by Staff reporter
07 Jul 2020 at 17:42hrs | Views
The Zimbabwe dollar depreciated 3.2% at the foreign currency auction to 65.8765 from 63.7442 last week. Today's auction marked the entry of exporters and holders of free funds who were liquidating their foreign currency.
A total of US$13.6 million costing $896 million was allocated to various sectors of the economy. This brings the total ZWL liquidity mopped out to date to $2.49 billion. Parallel market rates were stagnant.
At the auction, 264 bids were submitted. Of that amount 139 bids were allotted; 92 bids were disqualified while 33 bids which were below 50 were not allotted.
Of the allotted bids, 120 were in the 60-70 range, 17 bids were in the 71-80 range and two were at 90.

Reasons given for the disqualifications of bids range from duplicity (same invoice being submitted by different banks), outstanding CD1s and unacquitted Bills.
There are plans to penalise the bidder and the bank who are red flagged in future auctions. Companies with forex credit balances were also disqualified. This comes as RBZ governor John Mangudya said that going forward there should be a flattening of both the exchange rate and inflation curves to achieve price stability and to enable planning. Expectations are that the rate will converge between 65-70, in line with the fair value Hard Boiled Egg Index rate of 70.
RBZ MPC member Ashok Chakravati noted that there had been a narrowing of the exchange rate spread after a slowdown in the rate of depreciation of parallel market rates.
Meanwhile, parallel market rates saw no movement today with traders transacting small amounts less than US$1,000. Huge amounts were not being traded on Tuesday as traders were awaiting the foreign exchange auction results to get direction of the rates.  Current Zipit rates for big amounts are at 120 and small amounts between 93-97.
Mobile money rates remained subdued as liquidity woes continue with rates stagnant at 90 and buying rates at 77. Cash was trading at 75 to the dollar and buying rates at 64 per each dollar.

Source - finx