Home Business Interbank, auction rate nearly flawless in terms of alignment

Interbank, auction rate nearly flawless in terms of alignment

RBZ

Interbank, auction rate nearly flawless in terms of alignment

From the perspective of foreign currency buyers, the Reserve Bank of Zimbabwe’s auctions and the banking system’s interbank market were almost perfectly aligned yesterday, with only $1.20, or 0.3%, separating them.

On yesterday’s auction, the weighted average of bids was $325,3314, whereas the “ask” price on the interbank market, where banks sell US dollars, was $324,1332. As a result, regardless of which market an importer utilized to obtain money, the price was nearly equal.

While the midrate on the interbank market was $312,0164, there is no dealing between the willing buyers and willing sellers at that price. The banks were paying the willing sellers $299,8997 for each US dollar but were selling these to the willing buyers for $324,1332. The eight percent gap is to cover the expenses of the banks and give them a profit.

For the first time in four weeks all valid bids were allotted, and that was on both the main auction and the SME auction. The bid range on both auctions, the gap between the lowest allotted bid and the highest, is now narrowing and yesterday the bottom bid was $295 and the top bid was $350. This 18 percent is far closer to historic ranges, although still wider than average, but bidders are now coping better with their estimates. Bidders pay what they bid.

Of the almost US$25 million allotted the 274 main valid bidders shared almost US$20,7 million and the 753 valid SME bidders shared just under US$4,3 million.

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