RBZ introduces second forex auction for SMEs Weekly exchange rate stands at US$1:ZWL$80

THE Reserve Bank of Zimbabwe (RBZ) has introduced a second weekly foreign currency auction system to cater for small to mediumscale enterprises (SMEs).

At a recent business meeting held in Bulawayo with Finance and Economic Development Minister Professor Mthuli Ncube, businesspeople appealed to Government to include the participation of SMEs in the forex auction trading system. This followed concerns that the weekly Foreign Exchange Trading System introduced in June was biased towards individuals and large corporates.

SMEs operators had said they could not raise a minimum of US$50 000 to participate at the auction system. In response the RBZ said the second forex auction trading system for SMEs would be conducted every Thursday with bidders required to submit their bids as individuals or firm through an authorised dealer.

“The introduction of the SMEs Foreign Exchange Auction System is primarily meant to enable this sector to access foreign currency for the import of essential services and raw materials for their businesses,” said the monetary authority in a public notice.

RBZ said it had become clear that the SMEs sector had been crowded out of the foreign exchange space by the big players and thus the foreign exchange auction system shall continuously be fine-tuned in order to ensure it best serves the interests of the broader economy.

“Only bids for a minimum amount of US$2 500 and a maximum of US$20 000 from each bidder per auction shall be accepted. Bidders shall submit only one bid per foreign exchange and submission of more than one bid shall result in rejection of all bids submitted by the concerned bidder,” said the monetary authority.

It said where Thursday falls on a holiday, the foreign exchange auction would be held the following working day. Cut-off time for submission of bids will be 09:00 hours on the day of the foreign exchange auction.

Bidders are required to submit their bids to their authorised dealers by 15:00hrs on every Wednesday or if the Wednesday falls on a public holiday, on the next business day.

In addition, bidders are also required in their bids to provide sufficient details of the purpose of funds and description of goods and services to be paid for.

“Foreign currency shall only be allotted for the purpose for which a bid has been made and utilising allotted foreign currency for any other purpose shall not be permitted,” said RBZ.

Since the introduction of the Foreign Currency Auction Trading System, which replaced the fixed exchange rate of US$1: ZWL$25, the Zimbabwe dollar is this week trading at 80 to the greenback. At Tuesday’s auction a weighted average rate of 80,46 was recorded marginally up from the 76,75 recorded last week. — @okazunga