Reserve Bank of Zimbabwe governor John Mangudya says it is disheartening to note that five weeks after the market based forex trading platform was introduced, including several other interventions introduced before, during and after, some major businesses still use open market rates when quoting prices.

The RBZ chief made an impassioned call that all businesses should exercise self-discipline in pricing to avoid forcing authorities’ hand to ensure compliance.

“What we have seen is that there has been very positive uptake of the forex auction by the business community. We have also seen that the volatility of the exchange rate is now low and what we believe is left now is for the business community to exercise self-discipline in pricing their products.

“We have noticed that a number of large retail operators, that includes OK Zimbabwe and others, their pricing is now linked to the exchange rate, even markets in Mbare that are now using a cash rate of $70 to US$1, which is in line with the auction market rate, but then there are some businesses that are still using an implied rate of $80 to $90 per US$1.

“These rates are higher than the auction rate, although they have gone down from where they were, which was between $100 and $120 against the US dollar and any coming down of the rates means stability is coming.

“But we want to see all business entities exercising self-discipline; because you cannot come to the auction and buy (forex) at $70 to US$1 and benefit from exchange gain by charging higher prices,” Dr Mangudya said.

This comes after the central bank introduced the auction market system for foreign currency trading, which has ushered a more scientific and market based exchange rate determination criterion to guide price modelling and ensure predictability.

The last weekly auction held this Tuesday saw the ruling exchange rate between the Zimbabwe dollar and the US dollar depreciate by 4,7 percent to $72,1470 amid further narrowing of the bid band, as more private holders of foreign currency used the auction to sell.

This week’s highest bid rate of $82,17 was the lowest since the auction began. This is an 18 percent decline from the highest bid rate of $100 on the first auction on June 23, with the highest bid dropping through $95.92 and $85 by last week.

Of the US$14,5 million sold at the last auction, about US$2,5 million came from an exporter, who managed to sell their currency at a rate of $75, while an NGO, a listed entity and bureau de change also used the auction to sell off more than US$1 million between them.

More than US$3,5 million that traded was outside foreign currency from export retentions.

Tuesday’s auction, which is the fifth since the system started, recorded the highest number of bids at 290, beating the previous high of 264 recorded on July 7.

Demand for foreign currency at US$20,3 million was also the highest since inception of the auction system.

The previous high was US$18,9 million recorded during the second auction held on June 30.