OVER US$38 million was allotted to the productive sectors on Tuesday’s Reserve Bank of Zimbabwe (RBZ) weekly Foreign Currency Auction Trading System reflecting a 11,44 percent jump from the last auction.
This week’s allotment is the highest ever since the introduction of the weekly foreign currency auction trading system in June last year whose objective is to improve access to funds required by companies to import critical raw materials.
According to an update released by RBZ at the close of the auction yesterday, a total of US$38,586 million was allotted largely for raw materials, machinery and equipment, consumable procurement, retail and distribution. Raw materials needs dominated the allotment on the main auction at US$17,6 million followed by machinery and equipment at US$6.1 million.
The small to medium enterprises (SMEs) auction had a total of US$2,9 million allotted with consumables, raw materials, machinery and equipment also coming out top.
Last Tuesday, a total of 34,626 million was allocated to the productive sectors. The Foreign Currency Auction Trading System is aimed at reducing Zimbabwe’s import bill by ensuring that local companies are capacitated through critical raw material supply.
However, the Zimbabwe dollar slightly eased against the United States dollar at 83,75 from last week’s rate of 83,37.
RBZ Governor Dr John Mangudya has assured the nation that Zimbabwe was earning enough forex to stabilise the exchange rate. Since the introduction of the weekly Foreign Currency Auction Trading System, the exchange rate has maintained relative stability, which has kept price increases under check with inflation rising from 4,2 percent in December 2020 to 5,4 percent in January this year.
Dr Mangudya has attributed this to strong demand ahead of the festive season and the general rise in prices worldwide due to Covid-19 restrictions that have affected global trade and supply chains.
In August 2020, annual inflation rose to post dollarisation high of 837 percent after the country re-introduced and liberalised the local currency in February, after a decade-long use of the US dollar anchored multi-currency regime.
However, prices and inflation started receding following the introduction of the auction system in June last year, which brought about sustainable formal forex trading, predictability and the prevailing stability.