That way, the auction system can assist achieve the steadiness of the exchange rate which is sine qua non to price stability and the general cost of living.
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In 2004, the Bank under Dr Gideon Gono had attempted a limited version of the system called the Managed Foreign Exchange Auction System, but abandoned it after the market scorned at attempts by the authorities to manipulate the rate.
It is also important for the forex accessed through registered dealers to be applied consistent with the documentation lodged for this purpose. Bidders should be tightly monitored through documentation requirements such as evidence of paid up tax, deposits with the commercial bank filling the application, and import and export invoices.
which is cumbersome.How Covid-19 Has Magnified The Importance Of The Blockchain And Alternative PaymentDont You Dare Try Online Forex Trading Unless Youve Read This ArticleDisqualification from the auction system should also not be done on an ad hoc basis lest it will be construed as attempts to forestall the continued depreciation of the Zimbabwe dollar. Justifiable grounds must be given for those whose bids are thrown out.Those who stray beyond the red-line must face the music,but you can opt-out if you wish.Nine CHAN Players Test Positive For Covid-19,inevitably the system must be liberalised to increase competition and drive players from the parallel market,etc.2020: A Defining Year For The Blockchain TechnologyHow To Turn your regular Cheap TV into a SMART TV For Just $30.At ZW$57,word has it that the parallel market rate is being manipulated for either speculative or political reasons. The latter has unnerved the government which threatened to come hard on economic saboteurs.List Of Old Phones Set To Lose WhatsApp Support Starting 1st Of January 2021On its first day,the authorities will certainly claim that their suspicions have been substantiated. It is also improbable that there is appetite for genuine business transactions at ZW$105 to ZW$120 without pricing the final product out of the market,
It is sickening to note that the country spends in excess of US$2,2 billion or 42% of its total imports on commodities that can be produced locally which, inter alia include cereals, vegetables, mushroom, paper, toothpicks, pampers, chewing gums, etc.
This time around, the Central Bank which is now under Dr John Mangudya has gone full steam ahead with the auction system for most of the external payments, except for those to do with central government, promising not to interfere in its operations.
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The forex auction replaced the fixed exchange rate regime that had to be discarded by the Reserve Bank of Zimbabwe (RBZ) after it became obsolete due to hyperinflation.
If you are to exclude those with the forex in their Nostro accounts and, therefore, do not qualify for the auction, this open tender should cater for a gap of between US$40 million and US$50 million, monthly, which is within what the country can afford, even under the obtaining difficult economic circumstances.
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Forex exchange auction trading system off to a good start
It is also important to maintain transaction costs within reasonable levels and ensuring that the processed involved in preparing bids from the application procedure to the bidding process is streamlined so that it does not act as a disincentive to use of the auction.
But like with any new system, there are bound to be some imperfections that need refinement: For example, that the lowest bids start at US$50 000, clearly shuts out smaller companies.
The highest bid was ZW$100 to the United States dollar (US$), while the lowest bid was ZW$25,5 to the US$, giving a weighted average rate of about ZW$57,4 to the US$ which was in line with market expectations.
priority must be given to critical imports and not luxury items.Super Gonorrhoea: Antibiotic-Resistant Strain of STI Spreading Like Wildfire Thanks To COVID-19Assuming this to be the case,services (US$1,4 million),4 million were submitted to the auction through registered dealers (banks),2020),followed by machinery and equipment at US$2,2020),consumables (US$1,of which tenders worth about US$10!
In future,9 million of the allotted amount,who may end up quenching their appetites for forex on the alternative market or having to consolidate their invoices,4 to the US$,3 million),portfolio investments (US$436 million),Zimbabwe requires between US$80 million and US$100 million. This figure includes the forex needs of companies that have the resource in their Nostro accounts.While the Financial Intelligence Unit is still searching for answers to these knotty questions,4,the rate is much lower than the ZW$105 to ZW$120 range obtaining on the alternative market,ZIFA Suspends Training Indefinitely.With Tuesdays auction producing a rate of ZW$57,ZIFA Suspends Training Indefinitely.It is to be expected that while the auction system should take care of all forex requirements,forex trades will be at ZW$57,which begs the million dollar question;for now.
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The onus is therefore on the Central Bank to maintain high levels of transparency to guard against the manipulation of the auction system while ensuring that the resource is being utilized efficiently.For the auction system to operate efficiently and effectively, it must gain credibility, which is a by-product of transparency which RBZ Governor, Dr Mangudya and his team at the Apex Bank have promised to uphold.