IT’S not a bed of roses at the Reserve Bank of Zimbabwe (RBZ)’s foreign currency auction floor as more than 690 bids have already been thrown out since the system began on January 12, accord
ing to RBZ governor Gideon Gono.
Gono says cumulatively a total of 2 423 bids valued at US$47,6 million were allotted at the auction so far.
The success rate of the auction so far, as represented by the proportion of total value of bids awarded (US$47,6 million) to total amount of bids received (US$56,6 million), stands at 84,1%.
The governor said the bids were rejected for various reasons including the fact that they did not reflect “economic fundamentals”.
“We realised that holiday and travel were taking away more than US$1 million from the foreign currency that we have at the central bank,” Gono said last week. “We decided to stop requests for holiday travel purposes and instead allocate the money to other sectors needing it urgently such as health. We also stopped dishing out money for luxury vehicle importation.”
Importers now have to pay customs duty for their vehicles using prevailing auction rates as opposed to the $824 that was being used previously.
“I make no apology for removing and rejecting so many bids,” Gono said. “One cannot allow US$2 500 to be used for holidays every year even during mid-year. This can be done when the foreign currency situation gets back to normal levels.”
The governor said the bias of allocation was towards the productive sector. He said bias was also given for educational purposes, freight, drugs, equipment and machinery, raw materials, spares, chemicals, fuel and fees and subscriptions.
The governor said bids below the lowest acceptable rates were “rejected in all cases”.
For the period ending February 9 there were a total of 2 423 bids awarded amounting to US$47,6 million.
The value of bids rejected and received, on the other hand, amounted to US$56,6 million giving a percentage of bids rejected to total amount of bids to stand at 100%.