The Reserve Bank of Zimbabwe (RBZ) Foreign Exchange Auction this week allotted a total US$20 million amid expectations that the commencement of the 2023 tobacco selling season will boost foreign currency liquidity and further strengthen the local currency.

A trading update released at the close of trading Tuesday shows that a total US$19,8 million was allotted on both the Main and SMEs Auction platforms.

The number of bids received on the SME Auction was 212 with a total value of US$2,5 million with the highest rate received reaching US$1 to ZW$996 and a low of ZW$910.

The productivity stimulation priority was sustained with raw materials receiving a total US$742 403, machinery and equipment US$730 643, consumables US$407 072, services US$206 857, retail and distribution US$291 079.

On the Main Auction platform, raw materials and machinery were allotted US$9, 5 million and US$2,4 million respectively.

The Zim$ depreciated slightly by 0, 51% from the figure of ZWL907,92 recorded last week to the current ZWL912,58.

Commenting on the developments, economist Persistence Gwanyanya hinted that the kick-off of the tobacco selling season will go a long way towards easing stability.

"The small movements on the rate confirms the assertion of equilibrium with the just opened tobacco floors expected to increase US$ liquidity in the market as well as supporting stability. However, ZWL liquidity management will be key to support durable stability.

"Going forward there will be a need for the Treasury to increase Zim$ preference through the introduction of local currency taxes, duties and royalties. This is also seen as reducing the risk of dollarization," he said.

He warned that such risks come in the face of increase in concessions relating to forex transactions on electricity for intensive energy users.

"It's important to highlight that these concessions are not outside the dollarisation roadmap as," he added.