Zimbabwe on Tuesday conducted its first foreign currency auction in years to boost transparency and efficiency in the forex market.
Last week, the Reserve Bank of Zimbabwe (RBZ) announced that it will discard the 1:25 fixed interbank exchange rate system, which had been in place since February this year.
The central bank said that the auction system, to be held every Tuesday, was designed to give fair value of the local currency in relation to the U.S. dollar. At the auction system, the Zimbabwe dollar debuted at 57 against 1 U.S. dollar.
The new official exchange rate, however, remains below the parallel market rate which is running at between 80 and 95 per U.S. dollar depending on the method of payment.
Results of the auction conducted by the RBZ showed that the highest rate to the greenback on offer was 100 Zimbabwe dollars while the lowest was 25.5 Zimbabwe dollars.
Those who want to buy hard currency through the auction system would be expected to present one bid per auction ranging from 50,000 U.S. dollars to 500,000 U.S. dollars.