Zimdollar flat as street traders push cash transactions

The local currency was flat on Tuesday after it depreciated by a marginal 0.004% at the latest auction to trade at 81.3531 against the US dollars while the street rate remains range bound at between 98-107 although small amount trades are mostly skewed towards cash.

This also comes as the gap between the official rate and the parallel rate is still considered wide compared to regional comparatives as shown in the table below and this has heightened concerns that the country has settled for an exchange rate subsidy through the adoption of a crawling peg.

This week the highest allotted rate was 89, gaining on last week, s 87.10 and the lowest rate for the main auction was 79, which is unchanged from last week thereby widening the spread between bids to 12.66% from 10.25% last week.

The cash parallel market rate like other parallel market rates has remained stagnant for thirteen weeks at 82.

The Zipit rate is mostly between 101-107 while mobile money rates were quoting at 95-98. Street forex traders are now mainly dealing with USD to Cash trades and RTGS to ZWL cash trades due to increased US dollar use in formal businesses.

A total of US$27.85 million was apportioned to both the Main Auction (US$26.17m) and SMEs (US$1.6m) after a combined 366 bids were accepted and 54 were rejected.

The difference in the average weighted rate and the highest bid widened at 8.59% from 6.60% at the previous auction.

Raw materials continued to receive the highest allocation at US$10.9 million, Machinery and Equipment US$4.53 million, Consumables US$3.16 million, Fuel, Electricity and Gas US$2.59 million, and Services at US$2.77 million. Other amounts below US$1 million were allotted to Pharmaceuticals and Chemicals, LPG Gas, Paper and Packaging and Retail and Distribution.

News that the US senate failed to reach a deal on a stimulus package before elections has dampened an already bad state due to the resurgence of Coronavirus in Europe, as a result Cryptocurrencies have been having a field day to the news. Bitcoin surged 2.44% ($319.58) to $13 396.54. Ethereum and Bitcoin Cash also saw a day of heavy gains on the market with the former adding 2.29% ($9.00) to $403.15 whilst the latter closed 2.34% ($6.08) stronger at $265.75.

Source – finx

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