Zimbabwe’s currency continues to struggle as the nation grapples with a large gap between the official foreign exchange rate and the black market rate. While the official rate climbed this week at the RBZ-run forex auction, it remains far below the parallel market rate, fueling calls for reforms to the auction system.
At this week’s auction, the local Zimbabwean dollar weakened further against the U.S. dollar, appreciating to $1 USD for every 1,404 Zimbabwean dollars. This was up from 1,212 Zimbabwean dollars per U.S. dollar the previous week – a 15.7% devaluation.
However, Zimbabwe’s black market rate continues to hover around $1 USD for every 2,800 Zimbabwean dollars, highlighting a massive discrepancy of over 100%. This giant chasm between official and black market exchange rates has drawn demands for authorities to modify the forex auction to narrow the gap.
In total, the auction allotted $14.4 million this week compared to $16.3 million the week prior. The bulk of allocated funds – $7.4 million – was earmarked for raw materials, machinery and equipment procurement by businesses.
Unsurprisingly given the difficulties obtaining foreign currency via official channels, Zimbabwe’s parallel market for exchanging currency continues to thrive. The RBZ reports that 490 bids were submitted at the auction this week and 458 were accepted, worth a total of $26.8 million. Meanwhile, 569 bids from small and medium-sized businesses saw $3.6 million allotted at the SME auction.