Foreign currency deposits continue to surge

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By Alois Vinga

FOREIGN currency deposits in local banks continue to increase in a development indicating growing confidence in the country’s banking sector, latest Reserve Bank of Zimbabwe (RBZ) data has reveals.

Statistics from the central bank shows that, foreign currency deposits grew from an equivalent of ZW$103,7 billion, recorded in a comparative period in December 2020, to ZW$ 210,7 billion, recorded in December 2021.

“This was largely due to an increase in the value of foreign currency accounts (FCA) deposits from US$1.27 billion in December 2020 to US$1.94 billion in December 2021,” the RBZ said.

A similar trend was sustained in the month of January 2022 where foreign currency deposits increased by 82,04%.

“The growth in foreign currency deposits from an equivalent of ZW$108,59 billion in January 2021 to ZW$197,68 billion in January 2022, was largely due to an increase in the value of FCA deposits which grew from US$1,31 billion in January 2021 to US$1,71 billion in January 2022,” said the RBZ .

The central bank also factored in revaluation due to exchange rate movements as a contributor to the increase in the local currency equivalent of the FCA deposits.

Records from the central bank also show that in the month of September 2021, FCA deposits registered an annual growth of 64%, from an equivalent of $92,19 billion in September 2020 to $151 06 billion in September 2021.

This largely reflected an increase in the value of FCAs from US$ 1,13 billion in September 2020 to US$1,72 billion in September 2021.

The positive developments have been credited to the decision by the RBZ through Statutory Instrument 85 of 2020 which moved to allow the free use of foreign currency in settling local transactions.

The policy directives were further buttressed by the inception of Nostro accounts which have been hailed for consistently meeting the banking public’s demands as they are able to access their money anytime thereby demystifying past experiences where banks ended up short-changing clients.

These developments coupled with other economic measures have widely restored confidence which has continuously seen an increase in foreign currency deposits.