THE Reserve Bank of Zimbabwe (RBZ) says it has cleared the Foreign Exchange Auction backlogs in what market watchers believe to be a huge leap in strengthening the Zim$ currency.
The central bank was struggling to clear the widening backlogs and back in May 2021, President Emmerson Mnangagwa intervened and urged the bank to do so.
The RBZ auction system was introduced in 2020 becoming the major source for foreign currency and a fall back alternative for companies.
As at December 31 2022, the platform had cumulatively allotted over US$3 billion since inception but a significant chunk was still owed in backlogs.
But in a statement Wednesday, RBZ governor, John Mangudya announced that the headache of backlogs was now a thing of the past.
“The RBZ is pleased to advise the public that it has cleared the backlog of foreign exchange allotments under the Foreign Exchange Auction System. This development is a result of improved foreign exchange inflows in the country.
“Going forward, the Bank will abide by the Foreign Exchange Auction Rules and ensure that foreign currency is available to successful bidders within 14 days from the auction. This will go a long way in maintaining a stable foreign exchange rate and sustaining financial stability,” he said in a statement.
The development flies in the face of concerns raised by the Confederation of Zimbabwe Industries (CZI) president, Kurai Matsheza who told a local weekly business publication that companies were getting frustrated with the issue of backlogs at the foreign currency auction.
Market watchers speculate that the latest development will further strengthen the local currency since big corporations will cease to scavenge for foreign currency on the parallel market, a tendency which has in the past fueled price hikes and inflation.