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THE Zimbabwean dollar this week weakened by 4.3% on the Reserve Bank of Zimbabwe (RBZ) foreign exchange auction system as the official exchange rate slowly catches up with parallel rate.
A trading update released at the close of business Tuesday shows that the official exchange rate hit US$1:$97,13 up from last week’s US$1:$93,08.
On the main auction platform, priority towards revamping the productive sector was sustained with raw materials needs being allotted US$13,9 million, Machinery and Equipment US$8,4 million, Consumables US$2,9 million, Services US$1,3 million, Retail and Distribution US$2,6 million.
A total of US$31, 7 million was allotted on the Main Auction platform.
On the SMEs auction platform, raw materials were allotted US$2,6 million, Machinery and Equipment US$2,9 million, Consumables US$1,3 million, Retail and Distribution US$912 835.
A grand total of US$40,7 million allotted on both platforms.
Speaking to NewZimbabwe.com Tuesday, economist Persistence Gwanyanya hailed the official exchange rate for swiftly closing the gap to maintain the equilibrium between the two exchange rates.
“Following the recent disturbances in the equilibrium between the two exchange rates recently. We have seen trades on the auction system moving to correct the anomaly from around $83 in the last two weeks to the current $97. Of course, the official rate is not expected to chase the parallel market rates, but rather to edge closer to sustainable margins ranging from a difference of 20 % to 30 %,” he said.
The top economist said while the mechanisms put in place by the authorities have led to a slow- down in the movement of parallel market exchange rates, the current premiums were unlikely to come down as they are already reflected in the price structures.
“Going forward, focus must be directed at containing money supply growth targeting broad money supply and the implementation of holistic mop up tools. While little can admittedly be done to address the parallel market rate in an environment where the US$ is being used as a store of value, managing money supply and related market indiscipline issues becomes a priority,” Gwanyanya said.
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