RBZ currency auction accrues huge backlog

By The NewsDay | Apr. 29, 2022 | 2 Min read

“We are still in the process of clearing the backlog, and we have done quite a lot to date to the extent that it's now a few banks that are behind,” Mangudya said.

BY TAURAI MANGUDHLA THE Reserve Bank of Zimbabwe (RBZ)’s foreign currency auction system has reportedly accrued a huge backlog with some company bids approved in January still outstanding, NewsDay has learnt.

Although the quantum of the backlog could not be established by the time of going to print, RBZ governor John Mangudya yesterday confirmed the backlog in response to questions from NewsDay.

Banks are some of the stakeholders that are affected by the foreign currency auction backlog.

“We are still in the process of clearing the backlog, and we have done quite a lot to date to the extent that it’s now a few banks that are behind,” Mangudya said.

“The cooking oil producers are also benefiting from the LCs (letters of credit) for bulk procurement,” he said.

Last year, the foreign currency backlog hit a record 13 weeks, which then fuelled demand of the greenback on the parallel market and caused forex rates and inflation to skyrocket, while the local currency further weakened.

It also further weakened confidence in the local currency.

A NewsDay research early this year proved that foreign-owned banks faced delays in allocating foreign currency to their clients as they have to get approvals on transactions from their regional and global headquarters outside Zimbabwe.

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This has resulted in a growing list of retailers across the country now selling in United States dollars selected basics like cooking oil, sugar and other essentials such as dairy products, poultry products and beef.

The Confederation of Zimbabwe Industries (CZI) recently warned that the Zimdollar was on the “brink” of rejection in the face of exchange rate instability and increasing inflation.

CZI called on the RBZ to suspend the foreign currency auction system after the Zimdollar fell to $380 against the official exchange rate of $155.