THE Foreign Currency Auction Trading System introduced by the Reserve Bank of Zimbabwe was conducted yesterday with the exchange rate moving to US$1: ZWL$63,7 after US$16,3 million was alloted at the auction.
The weekly forex auction trading system, which determines the Zimbabwe dollar exchange rate was introduced last Tuesday to replace the fixed exchange rate of US$1:$25. At the inaugural auction system, the exchange rate was pegged at US1:ZWL$57,3.
Yesterday, the Central Bank revealed that the average weighted rate was ZWL$63,7442 against total bids amounting to US$18,97 million.
RBZ introduced the fixed exchange rate at the end of March this year in an attempt to stabilise prices of goods and services on the market following the outbreak of the Covid-19 pandemic.
It is hoped that if the new platform works, it will help build market confidence, improve access to foreign currency and help stabilise the exchange rate while speculative activity on the parallel market will slowly die. Prior to the introduction of the Forex Auction Trading System, the runaway parallel market had gone up to US$1:ZWL$90.
Under the foreign currency auction system, bids are submitted to, allotted and evaluated by RBZ with the offers for foreign currency while bids from buyers are submitted in the morning every Tuesday.
The auction only accepts bids of a minimum of US$50 000 and a maximum of US$500 000 with individuals and firms required to make a single bid per week through an authorised dealer. However, the ruling rate established during the weekly auction will be the rate for smaller sales and purchases of foreign currency during the week before the next auction.