Mthuli Ncube’s Zimbabwe dollar loses value

Cde Mthuli Ncube

The Zimbabwean dollar depreciated against the US dollar on the nation’s weekly forex auction last week. According to figures from the Reserve Bank of Zimbabwe, the official exchange rate moved to $1 US dollar for $5,015 Zimbabwean dollars – down 6.43% from the previous auction rate of $4,712.

This marks the first time the local currency has weakened by over 1% since gaining stability in June. On the parallel forex market, the Zimbabwean dollar is trading around $6,500 versus the US dollar, though some traders are willing to pay higher premiums depending on supply and demand dynamics.

However, monetary authorities say this level of depreciation is not a cause for concern as it remains within an acceptable band. They believe the slight decline is being driven more by post-election uncertainty rather than major economic factors like liquidity injections.

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At last week’s auction, a total of $18.2 million US dollars was allotted to successful bidders out of $20 million on offer. The bulk went to productive sectors through the wholesale platform.

Smaller amounts were also distributed via the retail forex market, prioritizing essentials like raw materials (US$45,391), machinery (US$275,395), consumables (US$121,390) and pharmaceuticals (US$47,661). Authorities are confident that as perceptions stabilize, the forex rates will remain within safe margins on both the formal and parallel exchanges.

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