Several local companies have lauded the foreign currency auction system introduced by the Reserve Bank of Zimbabwe (RBZ) in June 2020, saying the move has stabilised pricing.
Innscor, the country’s biggest food manufacturer, said the introduction of the foreign currency auction system is extremely encouraging though the effects drought and the coronavirus are still apparent. The company said:
The introduction of the foreign currency auction system and Statutory Instrument 185 of 2020 allowed for the implementation of precise pricing strategies, enhanced planning capability, improved capital allocation and value preservation for the Group’s business units; these policy measures are extremely encouraging.
Despite the relative improvement in trading conditions, the local effects of 2019/20 drought season and COVID-19 pandemic are yet to entirely dissipate.
For Delta, the country’s biggest beverage producer, the relaxation of regulations allowing the use of foreign currency for domestic transactions and the introduction of the foreign currency auction system has to date, stabilised both the exchange rate and inflation. However:
There are still distortions in value chain costs as the Zimbabwean economy settles on the dual or multi-currency trading system.
The remainder of the year will depend on whether the current stability in inflation and the exchange rate will sustain.
The businesses in Zimbabwe are witnessing recovery in volume and profitability on the back of improved access to foreign currency through domestic Nostro sales and benefits from a stable exchange rate.
Econet Wireless, Zimbabwe’s biggest telecoms firm, has also welcomed the introduction of the Foreign Currency Auction System saying it has been successful in some of its bids on the auction system.