The ZWL value breached the US$1: ZWL1,000 mark on the Reserve Bank of Zimbabwe (RBZ) Foreign Exchange Auction this week in a development moving towards closing the gap created by the official market rate in recent weeks.

A trading update released at the close of trading this week shows that at the current rate, the local currency depreciated by 4, 27% from the rate of ZWL959 against the greenback last week.

In comparison, the widely accessible rate on the parallel market is currently around US$1: ZWL1 400 while some retailers and traders are demanding higher premiums depending on market factors.

Market watchers however believe that this week's depreciation levels are an indication that the auction platform is resonating with realities on the ground as opposed to holding onto unrealistic premiums.

"Considering that traders are allowed to peg their prices at plus or minus 10% below or above the official rate, what it means is that in local currency US$1 can now be pegged at a high of ZWL1,100.

"Should this trend continue, there is a possibility of closing the wide gap which was opened up by the parallel market premiums in the recent past," an anonymous analyst said.

However, market players remain sceptical amid speculation that the parallel market premiums may deteriorate further amid calls for authorities to exercise caution in the payment of government contractors and service providers who are suspected to be feeding the parallel market as they scavenge for the greenback.

Meanwhile during the course of the day, the SME platform allotted 290 bids at a value of US$1,8 billion with allotments tilted in favour of productivity related needs.

The highest bidding rate reached ZWL1 125 and a low ZWL978 against US$1.

On the Main Auction, a total 327 bids were accepted with US$17, 1 million being allotted.