THE Reserve Bank of Zimbabwe’s (RBZ) says its foreign currency auction system has allotted US$4,12 billion, since its launch in June 2020, to local businesses and individuals, primarily for raw materials, machinery, and equipment.
This initiative was conceived to stabilise exchange rates and ease access to hard currency when it was scarce.
Before the auction system, Zimbabwe operated under a fixed exchange rate following the return of the local currency in 2019, ending a decade of dollarisation.
While the RBZ sees the auction system as a vital source of foreign exchange for the economy, some analysts argue it’s time to pull the plug.
“The auction system is an encumbrance to the forex complex,” stated an analyst, challenging the central bank’s assertion of its criticality.
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He criticised the auction’s “priority list” that skewed it towards allocation over market dynamics. December 2023 saw US$3,9 million allotted to 228 beneficiaries in the retail auction and US$12,8 million to 263 in the wholesale auction.
Raw materials, machinery, and equipment dominated the retail auction, claiming 58 percent of the total allotment. The remaining 42 percent went towards services, consumables, retail, and other sectors.
Total foreign exchange payments for the month reached US$685,41 million, with foreign currency accounts, the auction system, and the interbank market contributing US$651,02 million, US$16,73 million, and US$17,64 million respectively.
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