The Zimbabwe dollar exchange rate gained nine percent against the United States dollar on the Reserve Bank of Zimbabwe’s wholesale foreign currency auction for banks yesterday.
This is the second time within a week that the exchange rate has strengthened, as local currency liquidity continues to tighten across the economy following a series of economic stabilisation measures rolled out by the government since early May.
The measures have already managed to halt the wild parallel market rate run, which was the major driver of local inflation, translating to local currency-denominated price stability in the formal market.
The banks only managed to buy a third of the US$30 million the central bank had put up for sale on the wholesale auction due to growing Zimbabwe dollar liquidity crunch.
However, the Zimbabwe dollar is expected to post further gains going forward due to the prevailing tight liquidity situation in the market.
