Foreign currencies will be traded in Zimbabwe from Monday in a controlled auction system set up by the central bank in a bid to narrow extreme differences between the official and parallel rates.
The auctions are aimed at bolstering foreign exchange inflows to the official market and eradicating the parallel market, which had been blamed in part for skyrocketing inflation, currently over 600%.
The US dollar is currently worth some 6 000 Zimbabwe dollars on the parallel market but just 800 at the official rate.
The run-up to the auction saw the US dollar parallel market rates tumble by about 50 percent as nervous dealers flooded the market with foreign cash they had been hoarding in anticipation of high demand in the new year.
Under the new system, exporters will be allowed to trade 25% of their foreign currency earnings at an auction supervised by the central bank.
Another 25% will be ”surrendered to the Reserve Bank, at the current (official) exchange rate of 824 per US dollar for critical imports and other government requirements”, the Reserve Bank said.
The remaining 50% will be retained in the exporter’s account but for a maximum of just 21 days. Zimbabwe has long been experiencing a shortage of foreign currency as external debts have accumulated, while the government has failed to import adequate vital commodities such as fuel, food and medicines.
Traditional top foreign currency earners such as tobacco and tourism have nose-dived in recent years due to a controversial land reform programme and political tensions.
Zimbabwe is currently in the throes of its worst economic crisis since independence from Britain in 1980, with unemployment standing at 70%. – Sapa-AFP