Parliament says the Reserve Bank of Zimbabwe (RBZ) must hold foreign currency auctions daily rather than weekly and ensure that the supply of foreign currency to the auction is not interrupted in order to maintain the stability of the Zimbabwe dollar.
In its 2020 mid-year monetary policy review released last week, Parliament also urged the central bank against interfering with the market mechanism and monetary indiscipline as this will result in the total collapse of the auction system. It said:
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The RBZ (Reserve Bank of Zimbabwe) can increase the frequency of auctions per week after successfully getting it off the ground.
Lessons can be drawn from Angola, which started with weekly auctions and gradually gravitated to three times a week before increasing to daily auctions.
Effective implementation is key to success. Supply-side interventions are now critical to ensure uninterrupted forex supply.
The mistakes of 2004, where the auction system degenerated into an allocation system, should be avoided.
Over the last three weeks, the Zimbabwe dollar has marginally appreciated against the United States dollar to US$1:$81,71.