News Worth Knowing an rsens inestr it July 9-15 2020 @ FingazLive fi nac ace e inancia aette RBZ FX Auction Amount allotted: USD 13 602 407,84 Highest rate: 90,0000 Jury still Lowest accepted rate: 55,0000 Weighted average rate: 65,8765 Total bids: USD 15 872 481,93 Number of bids received: 264 Number of bids rejected: 92 FX03/2020 Source: RBZ out over Currencies (Bloomberg) % change USD:ZAR 16,9856 1,06 ◀ ◀ EUR:USD 1,1291 0,66 ◀ GBP:USD 1,2558 0,13 ◀ USD: JPY 107,5000 0,24 Stock Markets 10 343,89 0,86 NASDAQ ◀ NIKKEI 225 22,438,65 0,78 ◀ 12 150,00 0,69 currency JSE ◀ FTSE 100 6 179,61 ◀ 0,17 Dow 25 890,18 ◀ 1,51 Commodities ◀ ◀ Gold 1 802,85 0,45 ◀ Platinum 842,69 0,34 Brent Oil 43,25 0,39 Grains (Grain SA) ◀ auctions White Maize ZAR 2 327,94 0,4 Soya ZAR 5 637,85 0,5 ◀◀ uda ideme policy committee (MPC), said some banks and Wheat ZAR 3 099,81 1,4 arets ditr exporters were yet to put up their forex for the auctions, as expected — meaning that the system SAA to axe 2 700, HE jury is still out on Zimbabwe’s recently could “falter if more players do not willingly put re-introduced foreign currency auctions, up their money there”. with some banks and exporters remaining “The big disappointment was that some ex- fork out R2,3bn T SOUTH African Airways (SAA) wary about the system three weeks after its re- porters and commercial banks did not support the launch. auctions on the rst two Tuesdays will retrench at least 2 700 employees The revived foreign exchange trading scheme “But what I also hear is that the export sector and retain 1 000 workers following — which was last tried, unsuccessfully, in 2004 is now ush with local currency and thus is no meetings with union representatives, — is meant to stabilise the plunging Zimbabwe longer having to borrow from the banks,” he said. Department of Public Enterprises dollar and to provide a workable platform for “After we had rejected the ineligible ones (DPE) said yesterday. managing the country’s meagre hard currency (capital account transactions, fuel and non-essen- About R2.3 billion has been put supplies. tial forex applications), we were able to meet all aside to fund the severance packag- But experts who spoke to The Financial Ga- applications. es, according to the business rescue zette this week said while the system could work, “These were dominated by the productive plan. a con dence de cit and structural challenges such sector spare parts lique ed natural gas maize "(They) will be able to access as “disincentives for hard currency earners” — wheat and rice, as well as raw materials for in- the voluntary severance packages as eainted irst aita an manain directr iaran who are currently selling their cash at an average soon as a business rescue plan for dustry. carr is eected t drie te fi nancia institutins rt of $65, when the parallel market rate is up to $110 “I have heard from the Confederation of Zim- SAA is endorsed by a creditors vote," strate is eerience in a anin sans er ears e the DPE said, adding the agreement to the US dollar, affects the auction process and its babwe Industries (CZI) that this is making a mas- ined te an in a rm arcas c as cie fi nance ef cient operation sive difference to the productive sector,” Cross "brings important momentum to- fi cer irst aita an rerted an ater ta rfi t mi wards the adoption of a business Eddie Cross, an economist and member of the further told The Financial Gazette. in in te fi rst quarter te ear rm a ss miin in te Reserve Bank of Zimbabwe (RBZ)’s monetary ae rescue plan for SAA by creditors." reius erid — Wires Page 2 | July 9-15 2020 The Financial Gazette News Jury still out over currency auctions From Page 1 the rate at which we surrender 20 percent Henry Ruzvidzo, the CZI’s president, of our revenue from... 25 to 64. However, wished for “more players to participate in this is not adequate as we have to buy local the market”, to ensure that the productive inputs... priced at rates of 100. This makes sector accessed more forex on the ofcial our locally procured inputs expensive in market. S terms “The hope is that as more sellers come For the auction system to succeed there to the market a tting forex rate can be re- has to be condence which arises from alised, which will allow sales to continue ... genuine transparency and openness Any allowing for improved access by business perceived moves to manipulate the results he said. will result in sellers moving away to the Prior to the re-introduction of the For- alternative market Market players want to eign Exchange Auction System described know the true value of bids he said by central bank governor John Mangudya If we take last weeks auction for ex- as a Dutch model, the Zim dollar’s rate was ample if the banks had been trading at determined through a hard peg and man- for a week it raises suspicion when bids aged oat exchange rate regime both were successful at and higher bids were of which failed to stabilise the hapless lo- reected Who is making that decision and cal unit which was prematurely brought the criteria they are using If all this is not back by Finance minister Mthuli Ncube last clear then it will face a fate similar to the year. last auction system The auction system was rst introduced According to authorities local banks are years ago in the wake of similar currency holding in excess of S billion in their instability at the time but was abandoned foreign currency accounts within a year after it failed to help matters. Veteran economist John Robertson said As it is bids for Tuesdays auction have the hope was that the black-market rate fallen from to with the alloted g- would soon fall over the coming weeks ures also declining to nearly S million but a lot depends on whether the holders of statistics show. foreign exchange begin to believe they can With the rst public sales this time see- buy it back when they want to ing the Zim dollar debuting at an average At that point the Zimbabwe dollar will of to the greenback a fortnight ago the have stabilised but supply volumes of for- local unit further weakened to about last eign exchange have to improve before that week and is at a weighted average of ust point can be reached he added over this week which is still way below A retail sector executive who also spoke the parallel market rate. to The Financial Gazette also said there Delta Corporation one of the coun- was need to increase the frequency of auc- trys largest rms which took part in tions”. the rst auction but was disqualied from “There is a need to conduct the auction the second told The Financial Gazette this at least twice per week to lubricate the mar- week that the system still needs to be ne- ket. It is essential that ... products like fuel tuned and made more accessible to corpo- are continually sold in S dollars as most rates in dire need of hard currency”. service stations run dry,” he said. “They have many restrictions that are On his part Persistence Gwanyanya creating difculties for businesses For ex- an economist said stabilising the Zim- ample, if you have some money in your babwean dollar would require a heavy nostro account they will not allow you to dosage of measures related to multiple cur- bid regardless of whether or not the money rency-regime elements and anchored on the you have is enough to settle your invoices dual pricing system company secretary Alex Makamure said In short the only way to salvage the “They also have other restrictions per- Zim dollar today is to create demand for it, taining to administrative issues between which entails an efcient auction system banks and the RBZ which means that if This may require enforcement of the dual your bank has outstanding issues on your pricing system account you will not be able to bid he “Due to its low preference (as a store of said. value the local currency is preferred more Anthony Mandiwanza the chief execu- for transactional purposes. tive of Dairibord Holdings concurred that This means businesses which accept the system currently had signicant con- the Zim dollar only comply if they are con- straints. vinced that the chances of securing foreign What we see as a bit of a constraint is currency from the auction system are high the fact that companies are only allowed to “Importantly, this speaks to the need to submit a single bid through one bank he adequately beef up supply in this new mar- said. ket,” Gwanyanya said. Many companies are multi-banked and Meanwhile another MPC member have cash balances in different banks and Ashok Chakravati says he was condent foreign currency applications for differ- the revamped auction system will succeed ent invoices in various banks The auction because it is operating in different circum- system requires consolidation through one stances than in as Zimbabwe had no bank Mandiwanza a former CZI presi- control of its budget decit and accelerating dent, said. money supply, which increased pressure on Oliver Kamundimu Padenga Holdings the foreign exchange resource chief nancial ofcer said The auction See also Pages 8, 11, 15 and 17 rate has been helpful in that it has moved nesdeskfinga.co.