Volume of forex trade increases, US dollar now trading at 68.89 to the Zim dollar

By ZBC Reporter

IN this Tuesday’s forex auction session results, the Zimbabwe dollar eased marginally 4,58 percent to $68.89 to the US dollar which also saw the volume of forex traded increasing from US$13,6m to US$15,99m.

The auction also witnessed an increase in the number of companies wanting to buy foreign currency from 264 last week to 289.

The highest bid went down from 90 last week to 85 with the lowest bid standing at 40. Raw material imports were allocated the largest chunk of forex traded to the tune of US$5,6m.

THE decision by the Reserve Bank of Zimbabwe to allow individuals and other business entities to buy or sell foreign currency in small amounts through the banking system and bureau de change has been welcomed as a step in the right direction.

Expectations are high that through this market based foreign exchange rate determination system, a number of arbitrage opportunities and rent-seeking behaviours that had become troublesome in the foreign currency trade will disappear.

The new foreign exchange rate determination system is also expected to deal with some prevalent economic practices like forward pricing that was detrimental to the well-being of the Zimbabwean economy.

The new auction system, according to the central bank chief is also expected to bring smiles to exporters and in particular tobacco farmers and gold producers as they will now be getting a fair value on their hard-earned foreign exchange as they had previously complained that the fixed exchange regime of $25 was driving them out of business as they were surrendering their forex at a discount which was highly unsustainable to their operations.

As the new system continues to be in operation, expectations are high that the economy is going to witness a sustainable price discovery process that will give stability to the economy and set it on a development trajectory.