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*RBZ Forex Allotments Between June 2020 and December 2022*

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Since the launch of the foreign exchange auction system in June 2020 until December of last year, the Reserve Bank of Zimbabwe (RBZ) has allocated US$3.7 billion through the system.

The majority of it went toward the acquisition of raw materials and machinery.

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Why was the auction system introduced:

To provide much-needed foreign currency to local businesses for production at a time when the nation was facing problems with its foreign reserves.

The auction system was also designed as a method for determining the price of local currency.

The central bank estimates that the allocations during the previous year totalled roughly US$1.1 billion.

Following the adoption of the local currency in 2019 and a decade of a multi-currency system dominated by the US dollar, the auction system put an end to the fixed exchange rate that had been in existence.

When the government created the willing-buyer-willing-seller (WBWS) platform in the middle of last year, the auction remained the primary source of foreign currency for local businesses.

The government legalized the use of the US dollar for domestic transactions and domestic sales have since overtaken the two platforms as the primary source of foreign currency.

The backlog of foreign currency allotments from the RBZ’s initial 93 foreign currency auctions, according to the central bank, had been cleared.

In December 2022, deputy governor Dr Innocent Matshe stated that the apex bank was striving to shorten the period between the time that allotments are made and run and the time that the allottee receives money in foreign currency accounts.

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