The Zimbabwean dollar lost ground again against the greenback, as it depreciated five percent to $68.88 to the US dollar at today’s fourth foreign currency auction.
At the first auction system, the Zimbabwe dollar debuted at 57 against 1 US dollar. The auction system which is conducted on weekly basis, was designed to boost transparency and efficiency in the forex market.
According to the results of the auction today, which were published by the central bank, amount available for auction today was US$15.98 million and the highest bid was at a rate of $85, whilst the lowest was at $40. Total bids amounted to US$18.71 million.
The weighted average rate of 68.88 which is now the official market rate until the next Tuesday’s auction. However, the new official exchange rate, remains below the parallel market rate which is ranging from 90 to 100 per US dollar depending on the method of payment.
Adoption of the new system, in place of a fixed rate, has been hailed as a step in the right direction in terms of bringing sanity in the markets. There have been calls for total independence of the auction system to ensure that the exchange rate reflects the true value of local currency.
Most bona fide players continue to come to the auction including ZSE investors from abroad who are now taking dividends and capital out. Meanwhile, Zimbabwe’s annual inflation eased by 48.29 percentage points to 737.26 percent in June. However, month-on-month inflation, however gained 16.63 percentage points to close the month at 31.66 percent.
An unstable exchange rate, driven by changes on the parallel market has largely been responsible for driving inflation in the country.
Image: $10 note. Credit: newzimbabwe.