The Zimbabwean monetary space has been complex at best and downright confusing at its worst. We have seen many currency changes in the last 20 years alone including the Zimbabwean dollar (ZWD), bearer cheques, agro cheques, the bond note and the (new) Zimbabwean dollar (ZWL). The foreign currency exchange rate picture has been equally complex and we are perhaps at the height of confusion with 3 exchange rates (and many sub exchange rates) currently existing for the Zimbabwean dollar. These are namely the official exchange rate, the interbank exchange rate and the black market rate. Let’s navigate the weird and wonderful world of Zimbabwean dollar exchange rates.


The official exchange rate, also referred to as the auction rate is an exchange derived from the Dutch auction system introduced by the Reserve Bank of Zimbabwe to better allocate foreign currency to productive sectors of the industry. The exchange rate has many detractors who state it is out of touch with reality. The auction system only includes large businesses and added small to medium enterprises in its ranks with a minimum bid level of US$5 000 per week. A lot of exchange business is done below this amount so the auction excludes many market participants. The system has also shown weaknesses in providing foreign currency that has been bid for immediately. Instead, auction participants have been waiting up to 10 weeks to receive their foreign currency. Before recent changes, this was the indicative rate for pricing and liquidation of foreign currency earnings by exporters. The most recent auction, Tuesday 17 May greatly devalued the Zimbabwean dollar against the US dollar moving from 1:173.2865 to 258.5404. A whopping 33% in a single week, the largest since its inception.

Interbank/ WBWS

The new kid on the block when it comes to our exchange rates the interbank (a name formally used for the auction rate) rate is the rate applicable to foreign currency transactions up to US$2000 per transaction though initially, it was US$1000 per transaction. The more inclusive rate is held as being closer to reality but not quite there. The governor and other sectors refer to it as the “willing buyer, willing seller” rate, this may be indicative of the fact that the auction had neither willing buyers nor willing sellers, particularly in the case of exporters who were forced to surrender a portion of their proceeds. In its inclusivity, the interbank rate allows transacting both ways (buying and selling) though there is justifiable scepticism based on the experience of just how balanced the relationship is given the past treatment of banks of buy only outlets for foreign currency in Zimbabwe. When this exchange rate was introduced it became the reference for pricing for traders and government departments. At the time the RBZ expressed a desire to unify the auction and interbank rates in the future and this would explain the movement of the auction-rate closer to the interbank’s 1;280.

Black Market Rate/Parallel

The senior statesman of our current exchange rate regime is the black market rate (BMR). Also referred to as the parallel market rate it exists as the bane of the government authorities. As things stand, the use of this exchange is outlawed in Zimbabwe though that has failed to stamp it out. The parallel market rate which we had forgotten from its prominence which ended in 2009 with the adoption of the US dollar, resurged in 2016 with the emergence of the bond note. The parallel market rate is popular because of 3 primary reasons; it addresses the allocative inefficiency of official exchange rates, it is open to everyone and efficiently addresses market conditions without fear or favour. Black or parallel markets in general have these primary features in response to inefficiencies in official markets. It is the most widely used in pricing with many formal traders as well as the large informal sector in Zimbabwe opting for it. Primarily due to the aforementioned accessibility to all. As such it is a key driver of inflation in the country and hence it’s labelling as public enemy number 1 by the RBZ and government. It is hard to get an actual figure on the Black market rate unless you use it, which we don’t, but sources say it’s anywhere between 1:400 and 1: 450 versus the US dollar.

As mentioned earlier some of these exchange rates have sub exchange rates. For example, the BMR also varies depending on the channel used to transact. Different premiums or discounts) are applied for mobile money, bank transfer, internal bank transfer and cash. Whatever names we attach to these rates this is certainly a chaotic situation.