Auction and Black Market exchange rates


The Zimbabwe dollar rate against the US dollar moved to ZWL$81.71. However, black market rates for OneMoney, EcoCash and Zipit remained the same. You can take a look at the black market rates on the calculator below.

Disclaimer. We don’t participate in the trading of currencies on the black market.We are merely researchers of black market rates.

The black market rates shown above are just estimated averages, not the exact rates offered by traders.

Short history of black market exchange rates

The current wave of the black market started in 2016 when the RBZ introduced a surrogate currency called Bond notes/coins. Bond notes/coins were introduced in the back of widespread change shortages and a huge outflow of US dollar.The cure to these ills was deemed to be Bond notes/coins.

What didn’t go well with people was that the RBZ said the new currency had an equal value with the US dollar. It meant that 1 Bond note and 1 US dollar were at par. So earning $300 Bond notes was as good as earning US$300 according to the RBZ.

However, people,many of them who still bore fresh wounds from the loses they took in 2008, knew that RBZ’s math didn’t add up but they tolerated it for a while.

As a few months passed, it soon become apparent that RBZ’s 1:1 “gedye gedye”, as the central bank called it, was unrealistic. People soon started to prefer having US dollars in their hands than Bond notes.

As a result,moneychangers started emerging in corners in the CBD to broker the exchange of Bond notes and US dollars among citizens. This marked the rebirth of Zimbabwe’s black market.

Zimbabwe’s Black market exchange rate upward movement

Black markets exchange rates were stable in the early days. A whole month could elapse without a black market exchange rate ever changing. That could be attributable to the fact that the central bank wasn’t printing more bond notes than the initial 200 million.

But in 2019 the RBZ opened the tap and poured more bond notes into circulation which triggered the black market exchange rate’s upward march. Not only did the RBZ pump more physical Bond notes/coins into the economy but also electronic money. Unbeknownst to RBZ, all this was a recipe for disaster.

The black market exchange rate started to change on a monthly basis as the supply of bond notes and electronic kept on increasing. Still, the RBZ maintained its illusion that Bond notes/coins are at par with the US dollar.

The rise of electronic money

Since the advent of the black market, moneychangers traded Bond notes and US dollars only. But it soon started to change when electronic money started to balloon exponentially. Moneychangers increasingly started to disproportionately buy and sell US dollars with electronic money.

EcoCash having already hogged a disproportionate large size of the mobile money customers became the most used means to buy and sell US dollars using electronic money.

New minister,new money and the black market rate skyrockets

The 2018 New Dispensation of President Mnangagwa brought in an Oxford trained Finance Minister who some regarded as a technocrat. With Mthuli Ncube as the Finance Minister of President Mnangagwa’s Cabinet, people were hopeful that Bond notes will be abolished to turnaround Zimbabwe’s fortunes.

To the shock of many people, Mthuli Ncube didn’t abolish Bond notes. Instead, the Finance Minister flamed the fire by separating foreign currency accounts and local currency accounts, then labeled as RTGS accounts.

This move implicitly clarified that Bond notes and US dollars are two different currencies which are not at par. Consequently, the black market rate to this move by shooting up again.

Fast forward to February 2019, the RBZ clearly admitted that Bond notes and coins were different to US dollars by introducing a new currency called the RTGS dollar. The RTGS dollar was comprised of Bond notes, bond coins and electronic money and officially the RBZ said it valued 1:1 with the greenback. Again, the black market exchange rate increased as a result of the introduction of the RTGS dollar.

In less than 6 months, Mthuli Ncube gambled by re-introducing a new official currency called the Zimbabwe dollars. It also propelled the black market exchange rate to greater heights as fear gripped people that the the Zimbabwe dollar lose its value will quickly its value. People raced to buy US dollar with their Bond notes and electronic money.

Seeing that re-introducing the Zimbabwe dollar didn’t stabilize the exchange rate, the central bank introduced the Interbank Market, a market where buyers and sellers of foreign currency would trade. The trades in that market would determine the official exchange rate. The initial exchange rate between the Zimbabwe dollar and the US dollar in the Interbank Market was ZWL$25/US$1, a randomly choosen figure by the RBZ.

Predictably, it didn’t end the black market nor did it stabilize the exchange rate. RBZ went back to the drawing board and came up with a new ban mobile money operators. Furthermore, it abolished the Interbank Market and introduced a Managed Foreign Currency Exchange Market that will be used to determine the official exchange rate.

Understanding Zimbabwe Black market exchange rates

At best, Zimbabwe’s black market comprises of average people, moneychangers and companies. Average people are usually the ones who sell US dollars to moneychangers. And in turn, moneychangers sell US dollars to companies who need them to for importing.

Average people usually sell US dollars and receive Zimbabwe dollars as cash or electronic money in the bank account,OneMoney wallet or EcoCash wallet. Receiving money on each of those platforms gives different exchange rates to sellers and buyers.

Besides trading US dollars for Bond notes and electronic money and vice versa, moneychangers also trade Bond notes/coins for electronic. In other words, moneychangers can buy Bond notes/coins in exchange for electronic money.

Additionally, moneychangers can trade US dollars in exchange for the South African Rand or vice versa and the South African Rand for Bond or electronic money or vice versa.

Who sets the black market rate

Famous author of Troubled Currencies Professor Hanke who tracks Zimbabwe’s inflation rates came up with the Old Mutual Implied Rate (OMIR) to calculate accurate inflation rates of Zimbabwe.

He came up with the OMIR after Zimstat failed to produce accurate inflation rates in the 2007-2008 hyperinflation period. So to come up with accurate inflation rates, he had to calculate the exchange rate between the Zimbabwe dollar and the US dollar.

But the problem was that Zimbabwe had no official exchange platform to trade the two currencies. Fortunately, Professor Hanke noticed that Old Mutual’s shares were traded on both the Zimbabwe Stock Exchange and London Stock Exchange. The shares were fungible, meaning that a shareholder of those shares in either Zimbabwe or the UK had the same claim on the Old Mutual’s assets and earnings regardless of the market the shares were traded. In that same vein, he concluded that the ratio of the Old Mutual share price in Zimbabwe to that in the UK equaled the Zimbabwe dollar/Pound exchange rate.

Therefore, Professor Hanke converted the resulting Zimbabwe dollar/Pound exchange rate to Zimbabwe dollar to/US dollar via multiplying the Zimbabwe dollar/Pound rate by the Pound/US dollar rate which resulted in the creation of the Old Mutual Implied Rate. It is this OMIR that was used as a determinant of the black market exchange rate because it reflected the real value of the Zimbabwe dollar to the US dollar.

RBZ’s attempt to stop black market

Since the RBZ re-introduced the rate of exchange of the Zimbabwe dollar and the US dollar in 2020, it has blamed the black market for causing the local currency to lose value.

The central bank selectively avoided to blame itself for fueling the black market by its continuous printing of money and not taking action against the big sharks who supply Zimbabwe dollars on the black market for moneychangers to buy US dollars on their behalf. At some point some RBZ officials were investigated for fueling the black market but the investigation didn’t catch them wanting.

It took some time before RBZ started attempting to curb the black market. The first action the central bank took in 2019 was to suspend certain transactions on the biggest mobile money platform, EcoCash.

The ban soon ended after EcoCash approached the High Court to have it lifted. The trial did not go on after the central bank embarrassingly made a uturn and lifted the ban. Despite the hurried lawsuit, RBZ may have decided to lift the ban because any kind of disruption of EcoCash caused mayhem in the financial system.

The black market rate resumed its trajectory in early 2020 and the RBZ maintained the 1:1 illusion despite the market saying otherwise. It was in February 2020 that the RBZ eventually conceded that it misled the public with that illusion.

RBZ’s Governor John Mangudya abolished the parity of US dollars and Zimbabwe dollars and launched a market called Interbank Market which will determine the exchange rate between Zimbabwe dollars and US dollars.

The Interbank Market was comprised of banks and Bureau de Changes whose trades would determine the official exchange rate. The initial official exchange rate of the Intetbank market was US$1/ZWL$25.

However, black market didn’t pay attention to this managed float exchange rate system. The black market exchange rate continued to charge upwards at an accelerated pace. This time the black market rate was increasing on a virtually a weekly basis.

Understandably, the RBZ was not amused by the continuous depreciation of the Zimbabwe dollar and the total disregard of the Interbank Market to determine exchange rates in the country. So, again, the central bank went for mobile money operators. The RBZ suspended certain Agent lines that were deemed to be taking part in illegal foreign currency dealings.

The closure of those lines momentarily decreased the black market exchange rate. The central bank also closed accounts of certain microfinances and Bureau de Changes in it’s quest to end the black market. All those actions didn’t pay off because the black market exchange rate retraced its path and started going up with renewed vigour.

It was only in June that the RBZ closed all Agent lines that the black market rate came to a grinding halt. The shortage of electronic money to US dollars caused the black market rate to move upwards at a tortoise pace.

The RBZ used that moment of victory to abolish the failed Interbank Marked and launch a Managed Foreign Currency Auction that determines the official exchange rate.

This is not the first time that RBZ has introduced a Managed Foreign Currency Exchange Auction System. It was introduced in 2004 buy was abandoned within a year after the RBZ was accused of wanting to game the system. The central bank was accused of makin it impossible for sellers to withdraw their offers if they were not happy with bids.

How the Foreign Currency Auction works

An auction will be every Tuesday from 9am to 1600 hours where companies and individuals will can submit bids to buy foreign currency.

One individual or company is allowed to submit just one bid at each and every auction. If they submit more than one bid then all the bids will be disqualified an they will not be able to buy foreign currency on that auction.

The minimum amount of US dollars that a bidder can buy is US$2500, although it was once US$50000. And the maximum that can be bid for is US$500 000 at any given auction.

It is the importers of goods and services that are deemed essential who are prioritized in getting the foreign currency if there are too many bids from different buyers for a certain offer. The buyer with a winning bid will receive the US dollars in their bank account after they send the equivalent to the seller’s bank account.

At the end of the day, the RBZ will calculate the average of the highest and lowest bids and come up the official exchange rate for the week until the next auction, the following week takes place.

The foreign currency being bought and sold on the Auction is coming from export proceeds and a publicly unknown offshore facility arranged by the Reserve Bank of Zimbabwe.