Why the auction system cannot end parallel market?

Victor Bhoroma
THE Reserve Bank of Zimbabwe (RBZ) launched the Dutch auction system in June 2020 with the sole aim of improving transparency and efficiency in the trading of foreign currency in the economy.

Thus, the auction system was supposed to be a foreign currency price discovery mechanism which would eliminate the parallel market. This was inconsideration of the inefficiencies and volatilityregularly witnessed on the parallel market where shadowy actors determine the going rate for the day.

The bidding platform was supposed to be the Reuters Foreign Currency Auction Forex System (a real-time electronic trading platform between banks linked to export payments control system), but the central bank changed goalposts and Reuters was never used.