Parallel markets holds above ZWL270 amidst concoction of Interest Rate Policy Changes by the Central Bank

Wed Apr 6 00:05:48 CAT 2022

 <mailto:info at bulls.co.zw> 

Dear Subscriber,

Please find herein the RBZ Foreign Currency Auction Market results &
Commentary for 05 April 2022. 

Auction Results 05 April 2022

Auction Results 29 March 2022

US$

US$

US$

US$

SME Auction

Main Auction

SME Auction

Main Auction

Value of Bids Accepted

5,344,407.74

27,455,844.97

6,552,957.64

31,907,210.04

Total Number of Bids Received

1,014

384

1,159

449

Number of Bids Disqualified

27

22

74

36

Total Number of Bids Accepted

987

362

1,085

413

Number of Bids Allotted

987

362

1,080

399

Amount Allotted

5,344,407.74

27,455,844.97

6,548,579.22

31,062,799.46

Highest Rate Received

156.0000

155.0000

155.0000

155.0000

Lowest Bid Rate Allotted

135.0000

138.0000

134.0000

138.0000

Weighted Average Rate

145.8721

2.3640%

142.4237

Purpose

SME Auction

Allotments

Main Auction

Allotments

SME Auction

Allotments

Main Auction

Allotments

USD

USD

USD

USD

Raw Materials 

1,484,964.35

12,775,361.35

1,615,444.30

12,925,745.35

Machinery & Equipment 

1,822,353.87

6,147,142.15

2,360,898.79

7,733,877.71

Consumables  

741,667.68

2,206,114.68

978,058.20

2,750,273.25

Pharmaceuticals & Chemicals

508,531.55

1,981,989.39

575,063.56

2,462,416.33

Services 

454,214.21

2,284,519.89

654,488.81

2,474,066.14

Retail & Distribution 

14,500.00

0.00

16,436.96

263,817.96

Fuel, Electricity & Gas 

207,543.39

1,381,449.14

232,066.98

1,623,231.17

Paper & Packaging 

110,632.69

679,268.37

116,121.62

829,371.55

Total 

5,344,407.74

27,455,844.97

6,548,579.22

31,062,799.46

Grand Total Awarded

32,800,252.71

-12.79%

37,611,378.68

Harare- The Zimbabwe dollar breached the ZWL145 psychological mark weakening
to ZWL145.8721 against the greenback, retreating by 2.36% today on the Dutch
Auction market taking its YTD depreciation on the official market to 26%. On
the alternative market, the local currency maintained its previous week
trading range of ZWL270-ZWL280, a 32% depreciation placing its the premium
to official market at 92%. 

Speculation has been that liquidity created to fund the just ended by
elections and month end pension payments plus expenditure for roads and dams
was behind the rate spike.

The RBZ Monetary Policy Committee has announced a cocktail; of predominantly
interest rate based measures such as:-

a.	Reviewing the Bank Policy upwards from 60% to 80% p.a.
b.	Reviewing upwards the Medium Term Bank Accommodation Facility
Interest Rate from 40% p.a. to 50% p.a.
c.	Reviewing upwards the minimum deposit rates for ZW$ savings and time
deposits from 10% p.a. and 20% p.a. to 12.5% p.a. and 25% p.a. respectively
d.	Further tightening monetary policy by reducing the quarterly reserve
money growth target from 7.5% to 5% for the quarter ending June 2022.

The measures, while necessary from the regulator's perspective, they however
do pose a confidence risk to the market as they represent never ending
policy changes.

Furthermore, only the central bank can create liquidity hence success of
these measures depend on the RBZ & Treasury's ability to keep their own
words.

If there is one thing we have seen on the market, it is that once the rate
collapses on the real market, it rarely finds its way back. It just holds at
current levels and waits for Auction Rate to catch up.

Investors are encouraged to continue investing in hedging assets such as
ZSE, equity linked funds managed by asset managers and real estate among
other such assets. With rising inflation, ZW$ monetary investments are a no
brainer unless it's just a liquidity management mechanism.

  <mailto:bulls at bullszimbabwe.com> 

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Bulls n Bears 

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