The Reserve Bank of Zimbabwe has released 100 million dollars to clear the backlog of foreign currency allocations at its weekly auctions. This was revealed by the RBZ Governor Dr John Mangudya who restated the bank’s determination to expunge the backlog to gain some stability in the foreign exchange market.
The central bank introduced weekly foreign currency auctions in 2020 to boost the volume of US dollars for importers in the country. However, many of the successful bids could not be funded due to the shortage of forex.
“We need to bring stability in the exchange market and the money we have released will substantially expunge a big chunk of the backlog,” the governor of the Reserve Bank said.
Hyperinflation in Zimbabwe has caused an extreme shortage of currency notes which has been widely accepted in the country. The dollarization has had an adverse effect on Zimbabwe’s economy and the Reserve Bank has been desperate to have the Zimbabwean dollar used for everyday transactions and only provide US dollars for import operators.
Earlier in the year, Governor Mangudya said the apex bank had made progress towards clearing the outstanding amounts of bids approved at the auction and was now seeking to be current on fresh allotments. At the time, the backlog had reached 179 million US dollars.
The official exchange rate dropped to US$1: $138.19 from $134.08 in the previous auction. On the black market, US$1 is trading at between $250 and $280.