Forex demand in upward trajectory

Source: Forex demand in upward trajectory | The Herald

Forex demand in upward trajectory

Business Reporter

Demand for foreign currency on the auction platform is showing an upward trajectory with 540 valid bids receiving their allotments with SMEs hitting a record total allotment of over US$3,1 million.

The exchange rate trivially rose by around a quarter of a Zimbabwean cent to $83,8891 to the US dollar with the bid band remaining tight between $82 and $87.

Demand is likely to increase as business sectors re-open.

Most of the allotments each week are for industries and producers that were in the groups that were able to remain open during the level four lockdown, although many suffering reduced sales to closed businesses downstream.

The Confederation of Zimbabwe Industries (CZI) estimates that the lockdown saw around 44 percent of firms operating at less than 30 percent of installed capacity, while 32 percent operated at between 30 percent and 60 percent of capacity.

Only 24 percent of companies operated at between 60 percent and 90 percent capacity during the lockdown.

Similarly, in the past few weeks, there were no disparities between bids accepted and bids allotted.

All accepted bids were fully allotted, with the big companies being allotted the bulk of the foreign currency at US$32 million, while SMEs took up US$3,1 million. Total allotments amounted to US$35,1 million.

This week the highest bid on the SMEs platform was $86, while that on the main auction was higher at $87. The lowest rate allotted on both platforms was $82.

Foreign currency disbursements to industries saw raw materials accounting for the bulk of allotments at US$13, 5 million on the main auction and US$761 530 on the SMEs section.

Machinery and equipment came in second with US$5 million on the main and US$540 545 on the SMEs section.