Zimbabwe`s tight monetary policy regime forms an integral element of policy measures; fiscal and monetary authorities have rolled out since early May to rein in resurgent exchange rate-driven runaway inflation. This has seen the bank policy rate remaining unchanged at 150%, after being hiked from 140% in June this year, to stay the course of policy interventions that have helped to restore sanity to restore sanity in the economy. The apex bank also increased the medium-term bank accommodation interest rate from 70% to 75% per annum.

Inflation on a monthly basis, which peaked at 74,5% in June 2023 dropped to negative 15,3% in July 2023, while inflation on an annual basis decreased from 175,8% in June 2023 to 101,3% in July 2023. The feeling of stability of exchange rates was enhanced this week when the system easily retained its stability after the first wholesale auction held since the start of the growth in the value of the Zimbabwe dollar coped with banks bidding for more foreign currency than was in the pool.

On the 1st of August 2023, the total number of bids was 15 at the 14th wholesale auction amounting to US$ 17 076,56 with the pool only at US$ 16 million. A total of 3 bids were rejected increasing the lowest bid to ZWL$ 4 515, leaving the 12 remaining bids at US$ 15 969 095,56.

This was the largest single purchase by banks since the wholesale auctions started, overtaking the second auction of just under US15,44 million, and that was the auction that saw the largest single collapse in the value of the Zimbabwean dollar. These must have included all the larger banks who bid since some of the bidders must have bid for at least US$1 million the 3 excluded bank bid suggests that these 3 were on the smaller.