欧美文化:Interview: Zimbabwe dollar continues to lose ground against USD at central bank auctions

HARARE, Oct. 27 (Xinhua) -- The Zimbabwe dollar continues to lose ground against the U.S. dollar at the Reserve Bank of Zimbabwe (RBZ) administered weekly foreign currency auctions, with the latest on Tuesday seeing it shed 4.36 percent.

The local currency traded at 93.081:1 U.S. dollar at last Tuesday's auctions but weakened to 97.136:1 U.S. dollar this week.

The Zimbabwean dollar (ZWL) has been making significant losses against the U.S. dollar since the beginning of October and has so far shed about 10 percent against the greenback.

Figures from the central bank show that the highest bid at Tuesday's main auction was 115 ZWL:1 U.S. dollar while the lowest was 90 ZWL:1 U.S. dollar.

At the small to medium enterprises auction, the highest bid was 110 ZWL:1 U.S. dollar and the lowest was 90 ZWL:1 U.S. dollar.

Although the local currency has made significant losses during the month, it still lags behind the parallel market rate by far, with illegal money changers still buying 1 U.S. dollar for around 140 ZWL and selling for as much as 200 ZWL.

The spike in the black market rate has also resulted in corresponding increases in prices of basic commodities in the retail sector where many players argue that they are getting foreign currency from the black market instead of through formal channels.

Economic analyst Clemence Machadu said the continued decline of the local currency against the U.S. dollar pointed to "waning confidence in the local currency and deepening de facto dollarization in the country".

He said there were some sectors such as real estate which had already totally dollarized and rentals were paid in foreign currency, with properties also being sold in the same way.

"In instances where the Zimbabwe dollar prices are used in other sectors, it will be simply playing a proxy role and soon liquidated into hard currency as soon as sales take place.

"The Zimbabwe dollar is losing one of the fundamental functions of money, which is store of value, and many people who are concerned that it might fail to retain its purchasing power in the future are resorting to the U.S. dollar as their store of value," he told Xinhua.

He added that some civil servants in some sectors had also been given salary incentives which they converted to U.S. dollars which they had confidence in.

"So, all this is increasing demand for the U.S. dollar, and as a result weakening the value of the local currency," he said.

"You also have to look at it from the perspective of increased imports, which surged by almost 30 percent during the first half of the year, which means demand for forex also increased against limited supply," he said.

Machadu said industrial capacity utilization had also been rising, which translated to more demand for raw materials and capital goods, most of which were also imported.

"The auction system is also failing to meet demand, has backlogs and is also taking time to settle approved allocations; which is also compelling economic agents to resort to the parallel market, for them to meet their forex needs timeously.

"Time is of essence in business, as orders need to be met, bottlenecks need to be avoided in production and demand has to be met. All these factors also increase pressure on forex demand on the parallel market, against limited supply," he said.

RBZ has pledged to quicken the disbursement of foreign currency after businesses complained about the long waiting period between allocation at the auction floors and actual disbursements.

Machadu said there was also a huge informal sector in the country, whose products were virtually all priced in U.S. dollars, and the generality of the populace also relied on the sector for basic necessities and other things.

"The informal sector relies on the black market for its forex requirements and there are also a lot of arbitrage and speculative activities also happening there," he said.

"Their pricing is framed around the need to buy forex again on the black market when their stock is finished, so they also put a risk premium for a number of factors anticipated," he concluded.

Finance and Economic Development Minister Mthuli Ncube said this week that the government would not adopt the U.S. dollar as the sole currency, arguing that this could lead to a shortage of foreign currency and deflation.