Browsing: Foreign currency auction

Foreign Currency Auction System Fails to Meet Soaring Demand

Despite these fundamentals, the Zimbabwe dollar has continued to slide against the United States dollar prompting the government to take drastic and unprecedented measures last month which culminated in the prohibition of bank lending (albeit temporarily), the prohibition of third-party international payments, the prohibition of third-party payments to stockbrokers and the introduction of taxes which can be viewed as punitive for investors on the Zimbabwe Stock Exchange.

Prior to these stringent measures, the monetary authorities had instituted a policy called willing buyer willing seller to try and narrow the gap between the official foreign currency exchange rate and the parallel market foreign currency exchange rate. This gap between the 2 exchange rates reached its peak in the first week of May 2022 at 153% according to a Zimbabwe publication called the Business Weekly.

The premium between the parallel market rate and the official rate has reduced somewhat to 60%. The attempt to get the foreign exchange rates to converge set the parallel market rate raging and it has since breached the ZWL$ 500/US$ 1 mark in the first week of June 2022.