John Mangudya said on Monday in Harare that the auctions would force the new transitional currency to move from 2.5 to the U.S. dollar.
Mangudya said an average $12 million had been traded every week at the new forex interbank rate since Feb. 22 when banks started selling dollars to large corporate entities.
He told a parliamentary committee that the rate would not remain the same when auctions for tobacco, which brings the second largest foreign earnings after mining, open on March 20.
“We do believe that before or on that date the rate will have reached its equilibrium.
“We don’t believe it (exchange rate) will still be 2.5 (to the U.S. dollar),’’ Mangudya said.
Economic analysts are of the belief that the local unit will be devalued further.
The Reserve Bank scrapped a discredited 1:1 dollar peg for surrogate bond notes and electronic dollars last month, merging them into a lower-value transitional currency called the RTGS dollar.
The exchange rate for the new currency has been stuck at a rate of 2.5 to the greenback.
Those holding dollars have been reluctant to sell their money, saying the 2.5 rate was too low.