The Reserve Bank of Zimbabwe (RBZ) has released results of the latest foreign currency auction with the local currency not performing so well.

Apparently, the main beneficiary form the auction was raw materials followed by machinery and equipment.

RBZ introduced the Foreign Exchange Auction System in 2020 to determine the Zimbabwe dollar exchange rate with captains of industry and commerce cautiously optimistic that the platform will enhance transparency and efficient distribution of scarce forex.

If the new system worked to desired effect, it was to build market confidence, improve access to foreign currency and help stabilise the exchange rate while speculative activity on the black market could subside significantly.

The auction system replaced the fixed exchange rate, which was adopted in March the same year for certainty of pricing following the outbreak of the deadly coronavirus pandemic.

Prior to adoption of the fixed rate system, the market had used the interbank market system since February 2019.

Zimbabwe had used a US dollar dominated multicurrency regime since 2009, which had no exchange rate related issues to worry about, but this became unsustainable when the country started experiencing shortages of hard currency in 2016 amid growing imports.

RBZ governor Dr John Mangudya said at the time, the auction system will operate on the Reuters Forex Trading platform, a real-time electronic trading system.

The RBZ chief said the auction will improve transparency and efficiency in trading of forex in Zimbabwe.

Under the foreign currency auction system, bids would be submitted to, allotted and evaluated by the Reserve Bank of Zimbabwe with the offers for foreign currency while bids from buyers are submitted in the morning every Tuesday.