Zimbabwe: RBZ Auction Sustains Stability, Targets 55 Percent Inflation Reduction By July

Reserve Bank of Zimbabwe.

Reserve Bank of Zimbabwe (RBZ) foreign exchange auction system has managed to sustain stability nearly a year since its introduction amid targets to achieve a 55% yearly inflation reduction by July.

A trading update released at the close trading Tuesday shows that the Main Auction received 328 bids with the highest bidding rate reaching $87 and a low of $82.

Allotments sustained an economic productivity bias with raw materials receiving US$11 million, machinery and equipment US$6.7 million, consumables US$3 million, services US$3.6 million, retail and distribution US$2.9 million, fuel electricity and gas US$2 million, pharmaceuticals US$2.8 million, paper and packaging US$498 128.

On the Small to Medium Enterprises Auction, the 328 bids received were allotted US$4.5 million with the highest bidding rate reaching $88.50 and a low of $82.

Raw materials were allotted US$1 million, machinery and equipment US$1.1 million, consumables US$1 million, services loans, retail and distribution US$377 506, fuel, electricity, and gas US$124 209, pharmaceuticals and chemicals US$220 705, paper and packaging US$236 276.

The grand total awarded on the two platforms was US$37.3 million with the official exchange rate remaining stable at $84.52.

Meanwhile, the central bank's Monetary Policy Committee (MPC) has reaffirmed its commitment to sustaining the disinflationary path to the end of the year and expects year-on-year inflation to go down to below 55% by July 2021.

The MPC also agreed to maintain the Bank's policy rate at 40% and the interest rate on the Medium Term Accommodation Facility (MBA) at 30% per annum.

It also approved a facility of $500 million to support Micro, Small, and Medium Enterprises (MSMEs) which will be accessed from banks and micro-finance institutions at an interest rate of 30% per annum for purposes of enhancing production and productivity across all the sectors of the economy.

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