By Alois Vinga
THE Reserve Bank of Zimbabwe (RBZ) says local companies recently struggled to snap up US$25 million floated on the market in a development indicating limited ZWG availability in the market.
The revelations come on the back of the inception of a raft of measures aimed at easing the ZWG volatility, forcing authorities to effect a 43% devaluation directive and hiking interest rates to ease depreciation levels.
Market speculators have, however, indicated that over-flooding the market with ZWG remains a risk for another wave of instability.
However, in a statement, the RBZ governor, John Mushayavanhu said indications revealed recently indicate acute shortages of the ZWG currency.
“The pipeline demand for this week has risen to US$25 million due to increased pressures to fund the 2024/2025 agricultural season requirements.
“Consequently, on 24th October 2024, a market clearing foreign currency sale of US$25 million, and the market could only take up US$19 million because prospective buyers did not have enough ZiG liquidity to purchase available foreign currency,” he said.
Over the last three weeks, the RBZ has also injected about US$32 million into the interbank foreign exchange market to smoothen the mismatches between supply and demand.
Mushayavanhu said traditionally the last quarter of the year witnesses increased demand for foreign exchange to meet critical requirements for the summer agricultural season and for preps for the start of the festive period prompting the bank to remain vigilant on US$ supplies.
In line with the recent monetary policy measures issued by the Monetary Policy Committee (MPC) on September 27, 2024, the RBZ has witnessed a satisfactory increase in the willing-buyer willing-seller (WBWS) foreign exchange trading activities.
Holders of foreign exchange, including exporters, have been selling their foreign currency in exchange of the ZWG to fund their tax obligations and other payments denominated in local currency.
“The recent market intervention has brought the cumulative participation of the RBZ in the WBWS market to US$50 million in October 2024 alone,” he added.
