The weighted average at yesterday’s foreign currency auction run by the Reserve Bank of Zimbabwe, the first pure Dutch auction with a pre-announced bundle of currency on sale, was $1 888,0119:US$1, which was 34,4 percent below the $1 404,8039 the previous week.
The Reserve Bank announced last week that US$15 million would be available this week for yesterday’s auction.
This is the main reform in the auction system previously announced as part of measures to stabilise the exchange rate.
At the end of the auction only US$14 166 812,38 was allotted, since all bids on both the main auction and the SME auction below $1 801:US$1 were rejected for allotment.
The highest bid on the main auction was $2 000 and on the SME auction $2 100. This gave the final allotment a narrow band, with the lowest allotted bid on the main auction just 10 percent below the highest bid, a band very close to the bid and ask rates on the interbank market.
Chopping off bids at $1 801 meant that there were no significant bargains for bidders in either auction, although clearly a lot of bidders were seeking bargains.
Accepted bids, that is bids which met all the Reserve Bank requirements because bidders had cleared their previous imports and had the required amount of local currency in their accounts, totalled a little over US$60 million, more than four times what was eventually allotted.
This was twice what acceptable bidders had sought last week, with almost exactly half of those bids accepted.
It seems that bidders were first testing the waters of the reformed auctions, and secondly were seeking bargains of cheap foreign currency.