The Confederation of Zimbabwe Industries (CZI) has bemoaned the rising black market rates which have skyrocketed in recent weeks while the official rate has remained somewhat stagnant. The official rate is around the 87 ZWL to 1 USD mark while the black market is 180 ZWL. This means that the black market rate is essential twice the official rate.
This means that there is now a massive opportunity cost for exporting businesses who have to give up their foreign currency to the auction at the official rate which is many times lower than the black market rates.
The parallel market premium, which has since risen to about 63 percent, is considered a tax by exporting businesses, as they offload the surrender portion of their export earnings at the auction exchange rate while they conduct their business in a cost environment determined by mixed rates depending on where their suppliers of goods and services are sourcing forex.
The best-case scenario being that they are charged at a blended rate of the auction and parallel market and worst-case scenario being the application of the parallel market rate.
Thus, the huge parallel market premium is dampening the motivation for exporting business as it eats into the viability of exports.
Not only do exporting businesses have to give up their foreign currency at sub-optimal rates, but those businesses that are looking for foreign currency are also finding it increasingly hard to get it at the official auction which is struggling to settle winning bids. The RBZ for its part has pledged 200 million USD to the auction which they say they will use to clear the backlog.