BY value foreign currency now constitutes the bulk of the broad money in the country’s banking sector, latest statistics from the Reserve Bank of Zimbabwe show.
According to the central bank’s Economic Review for the month of June 2020 Report released last week, the overall broad money in the economy stood at $99,82 billion as at end June 2020, up from $59,48 billion recorded in May 2020.
“The broad money stock largely consisted of foreign currency (FCA) deposits, equivalent to $57,70 billion of 57,81 percent, reads part of the June 2020 Report. Local currency deposits stood at $40,91 billion or 40,97 percent. The foreign currency component of the deposits increased by 1 384,18 percent, over the year to June 2020, largely attributable to revaluation adjustments due to exchange rate movements, the apex bank said.
The local unit depreciated from $6,62 per US$1 in June 2019 to $63,74 per US$1 at the second Auction in June 2020. Foreign currency deposits also increased in US dollar terms, owing to inflows attributed to the tobacco selling season, as well as the policy that allows usage of free funds for domestic purchases. Local currency deposits registered a year-on -year growth of 280,35 percent. According to the central bank, the FCA deposits for the first time exceeded the local currency denominated deposits, mainly on account of exchange rate movements.
The annual growth in broad money was largely driven by increases in credit to public nonfinancial corporations, 564,10 percent; private sector, 527,58 percent; and other financial corporations, 317,77 percent. Net credit to Government, however, recorded a year-on-year decline of 19,79 percent as at end June 2020, consistent with improved fiscal performance during the first half of 2020, where Government realized a budget surplus of about $800 million. — BH24