The Reserve Bank of Zimbabwe (the Bank) wishes to bring the attention of the public to the following foreign currency-related issues:
Foreign Exchange Auction Since the inception of the Foreign Exchange Auction System on 23 June 2020, all weekly Foreign Exchange Auctions have been conducted smoothly and bids have been settled on a timely basis on Thursdays, on a T+ 2 basis as per the Foreign Exchange Auction Rules. The Foreign Exchange Auction has so far been able to achieve its main purpose of price discovery in order to reduce exchange rate volatility, stabilise prices and enhance transparency in the management of foreign exchange.
To date, a total amount of US$71.1 million has been traded on the Foreign Exchange Auction, with the number of bids increasing from 92 at the commencement on 23 June 2020 to 290 bids received on the recent Foreign Exchange Auction of 21 July 2020. Funds allotted were mainly utilised for productive sector import requirements including procurement of raw materials and packaging (US$32.1 million), machinery, plant, equipment and spares (US$18.2 million) procurement of medicines, chemicals and consumer goods (US$16.5 million) and services (US$4.3 million). Priority shall continue to be given to productive sector imports whilst service and capital payments will be restricted to no more than 20% of auction allotments.
Bids for funding legacy foreign exchange obligations and/or blocked funds will not be eligible. A payment plan to expunge blocked funds is being developed and will be advised in due course. Individuals and entities with adequately funded foreign currency accounts (domestic or foreign Nostro) are also not eligible to participate on the auction.
Whilst a significant number of bidders have complied with the Foreign Exchange Auction Rules, a few have been found wanting for various reasons ranging from failure to abide by Exchange Control Regulations and failure to disclose to their bankers their foreign currency account balances, especially by multi-banked entities. It is against this context that, going forward, all bidders are required to sign a declaration of compliance with the Foreign Exchange Auction Rules. Failure to make the declaration and false declaration will result in penalties including bid rejection. Banks should continue to conduct Customer Due Diligence (CDD) to ensure that funds are used for permissible and legitimate transactions and to adhere to Know Your Customer (KYC) principles to safeguard the integrity of both the Foreign Exchange Auction System and the banking system as a whole.
