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Business Reporter

Zimbabwe’s industrial players continue to back the Reserve Bank of Zimbabwe’s foreign currency auctions, with over 70 percent of total foreign currency allotted to date having gone towards the firms’ imports of raw materials, machinery and equipment. “The official exchange rate became the major determinant in the pricing equation,” said the Confederation of Zimbabwe Industries chief economist Tafadzwa Bandama.

“It is encouraging to note that business can now access foreign currency through the formal channels although its now taking longer to access foreign exchange.”

This week, the Zimbabwe dollar will trade at 83,9827 to the United States dollar, a marginal 0,11 percent decline.

The formal auction system is now the source of foreign currency for key industrial players, with a record 612 entities bidding for the hard currency this week, with 503 firms, all those with the paperwork correct, being alloted all they bid for. Bids were only rejected if bidders had not accounted for exports or imports by the deadline, were not using their own foreign currency first before asking for more, did not provide adequate invoice support of what they buying with the money, or were trying to pay for goods and services not on the import priority list.

All accepted bids were fully alloted, with the big companies being alloted the bulk of the foreign currency at US$34,17 million, while SMEs took up US$2,97 million.

Total allotments amounted to US$37,14 million, up from US$35,1 million last week.

This week the highest bid on the SMEs platform was $86, while that on the main auction was higher at $87. The lowest rate alloted on both platforms was $82. This band was the same as last week.

Foreign currency disbursements to industries saw raw materials accounting for the bulk of allotments at US$15, 7 million on the main auction and US$658 141 on the SMEs section.

Machinery and equipment came in second with US$5,3 million on the main and US$618 141 on the SMEs section. And consumables came in third on the main auction at US$2,89 million; but on the SMEs section, consumables took up US$566 806

The foreign currency auction system has brought about pricing stability, and both the fiscal and monetary authorities have maintained a tight leash on money supply growth.