Action now needs to be taken against companies that are abusing Zimbabwe’s foreign Exchange Auction system

By Ngoni Chihombori

On the 9th of July, 2021, the Reserve Bank of Zimbabwe issued a press statement titled “Update on action taken against certain entities for the abuse of the foreign exchange auction system, exchange rate manipulation and flouting of exchange control rules and regulations.”

The purpose of this particular press statement was to serve as a follow-up update to the general public on the punitive action that had been taken on the 18 trouble-stirring entities that had appeared on an earlier published list of notorious entities released by the financial services regulator.

These supposed delinquents had been red-flagged by the Central Bank for deviating from the stipulated terms and conditions regarding the usage of scarce forex accessed via the official forex interbank auction market and ultimately throwing spanners in the works, preventing the “would-have-been” smooth sailing forex auction market.

According to the update, a further 21 firms had been added under investigation for partaking in the same monkey business.

Out of the final list of 39 offenders, some of the culprits had been fined various undisclosed amounts, with their “access cards’ to the banquet of ‘privileged elites’ temporarily suspended pending receipt of the respective fines slapped upon them.

An undisclosed number from the same pool walked away with nothing but just written warnings.



This public charade was intended to dissuade other fx auction market participants from engaging in similar rent-seeking behavior while restoring public confidence in the Central Bank’s regulatory oversight role of “guardian of the country’s overall monetary system.”

I would however like to argue that the Central Bank has rather far outplayed even Santa Claus, dishing out free millions on a weekly basis to the “privileged elite” with special access to partake on the Interbank Forex Auction.

The Central Bank has evolved and mutated into a “2021 Zimbo Robin Hood”, the only major difference with this African variant of Robin Hood being their extremely weird fetish as displayed by their high propensity to rather rob the poorest, weakest and most vulnerable and redistribute this bounty among the few privileged elite in the name of stabilising the economy and making life better for these very same direct victims. The irony!


I am going to use a sequel of articles under the “Dissecting The FX Auction System” broad theme to justify my conclusions above.

This recent passed 6th of July marked the 53rd edition of the weekly forex auction since its introduction on the 20th of June, 2020.

The Government, largely represented by the notorious tag-team of the learned Professor, Mthuli Ncube, the incumbent Treasury head honcho, and John Panonetsa Mangundya, the current Central Bank Governor, chief architect and mastermind of the “1:1 Gedye Ponzi”, undeniably the largest yet not-very-much-talked-about heist of the decade, possibly the most notorious duo this country has seen since the “Chidhumo-Masendeke” combo, have been leading the propaganda choir, using any and every opportunity received, to sing praises about the great economic successes and stability brought about by the “extremely successful” interbank forex auction system.

Oh well, as they say, numbers don’t lie! What do the numbers tell us after Year 1 of the fx auction system?

A cumulative total number of official bids received amounting to US$ 1. 618 Billion has been officially recorded over the 53 weeks ending 7 July, 2021 on both the main FX auction market and the latter-created SMEs auction market, of which 97.33% of this, US $1. 586 billion has been successfully allotted.

A look at official RBZ Data on official foreign payments processed throughout the year 2020 via the official monetary system and banking channels, shows that the banking system processed a cumulative total outward US$4.793 Billion.

Using this US$4.793 Billion figure as a proxy for national FX payments annual demand, this effectively implies that the supposed extremely successful FX Auction system at best can only serve c.33% of this demand.


According to the same Central Bank, for the year 2020, the country recorded cumulative merchandise imports worth c.US$5 Billion.

Going by this figure as a proxy for cumulative annual national FX demand, the FX auction system can only meet c.32% of the national FX appetite.

This effectively means that the other c.67% of National FX demand has to be satisfied via alternate channels whose implications I will discuss in the sequel editions of my current series.

The Zimdollar has declined 49% against the USD on the official FX auction market from its entry valuation of 57.36 ZWL units equivalent to a single unit of the Greenback to its 6th of July valuation of 85.51 ZWL units per unit of the Greenback.

However, on the parallel market over the same period, the decline against the greenback has been more pronounced with the struggling local currency losing c.75% of its value against the USD over the same period (1 USD: 80 ZWL decline to 1 ZWL :140 USD).

The asymmetry in the official valuations (FX auction rate) and the reality of many Zimbabweans excluded from the FX- auction high table whose only access to the greenback is via the parallel market, as at the 53rd edition of the FX Auction represented a 38.9% discrepancy in the prevailing valuations, implications of which I will discuss more in subsequent articles under the same “Dissecting The FX Auction System” theme.


Ngoni Chihombori is an independent Macroeconomic Analyst based in Harare. He is reachable on



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