One of the more curious trends in the weekly Reserve Bank of Zimbabwe (RBZ) foreign currency auctions is the rise in the top bid over the last couple of weeks, while the weighted average moves by a fraction of a Zimbabwean cent.
The minute shifts in the weighted average, a weekly movement of fraction of one hundredth of a percent, are easy to explain. Almost all bidders by now must be placing bids in a tiny range of a few cents, perhaps as little as two cents, as they seek predictability in exchange rates.
The rising lowest bid is also easy to explain. Everyone loves a bargain, but the auction system will reject bids that are too far below the bulge of bids around the average.
RBZ is not going to let bidders indulge in speculation now that we have reached a state of hyper-stability.
So even a bidder with invoices for the highest priority imports has to be careful of just how far below the previous average they can go.
There does not have to be anything official in any signals. Bidders’ bankers are quite capable of doing the sums and strongly advising their clients not to chance their arm with a bid that may well be found to be too low. Herald