As part of a new series of measures meant to breathe life into the flailing Zimbabwean dollar the Zimbabwean government has announced that from now onward the willing buyer, willing seller rate will essentially be now the official rate. Instead of the rigged auction rate determining what the official rate ought to be the willing seller willing buyer rate used by banks will instead now be used by the auction instead of the other way round.

Government is committed to a market determined exchange rate system. In this regard, the willing buyer-willing-seller foreign echange system put in place on 1 April 2022 shall continue to be used as a benchmark for price discovery of the exchange rate and for the smooth operation of the auction system.

Overtime the auction rate and the interbank rate established through the willing-buyer-willing-seller will provide the basis for orderly unification of the exchange rate

President Mnangagwa’s speec on the issue

Tacit admission of failure

This is all but an admission of failure. Like the failing ZUPCO monopoly, the auction system had become a marginal event as fewer and fewer companies took part in it. The supply of money also dried up thanks to a rigged rate that barely changed to reflect market conditions. The result was that no one was willing to surrender their money at the rate at which the auction was offering. This led the government to resort to militaristic tendencies where they would all but raid people’s accounts a charge which they feebly denied.

The hope here is that an enhanced rate will boost supply, reduce the foreign currency backlog and hopefully bring back legitimacy to the sideshow which was openly criticised by the CZI in an embarrassing episode that caused a flurry of accusations and the trading o barbs between leading businesses and the authorities that usually takes place behind doors as the government prefers.

ZIMRA will also be using the willing seller willing buyer rate to conduct its transactions. This is the final nail in the coffin for the doomed auction rate.