Foreign currency deposits increase by 3.3 %

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By Alois Vinga

THE Reserve Bank of Zimbabwe (RBZ) has reported a 3.3 % foreign currency deposit increase within the country’s banking sector for the period ending June 30, 2019, a second successive positive jump this year.

The details are contained in the Central Bank’s latest monthly economic review for the month of June 2019 and indicate growing confidence with the country’s banking system.

“Foreign Currency Account (FCA) deposits grew from 23.30% for the month of May 2019 to 26.33 % in the month of June signifying a 3.03 % increase”, the report said.

However, market analysts speculate a huge decline in FCA deposits in the period after June 2019 as they argue that the decision by government to outlaw the use of foreign currency in settling local transactions.

The RBZ has also observed foreign currency receipts from other sources like export remittances, offshore loan proceeds.

Income receipts and foreign investment for the first half of the year fell 24% to US$2.58 billion, compared to US$3.40 billion during same period in 2018.

The mining sector revenue fell by 20% to US$1.2 billion, despite increases in the price of gold and palladium.

Meanwhile, the central bank observes that month-on-month, broad money supply increased by 14 % due to a 73% expansion in foreign currency deposits, which can be attributed to exchange rate depreciation.

“The annual growth in money supply was, in large part, attributable to expansions in demand deposits, 69.31%; negotiable certificates of deposits, 58.43%; currency in circulation, 31.39%; and time deposits, 11.74%,” the report said.

Month-on-month, broad money supply stood at $13,009.04 million in May 2019, a 15 % increase from $11, 3 million.

According to the report, monthly merchandise exports fell by -32.6%, from US$458.6 million in May 2019 to US$309.2 million in June 2019.

The decline was underpinned by a fall in export earnings of gold, ferrochrome and industrial diamonds. Gold exports declined by 31.3%; industrial diamonds, 45.9%; and ferro-chrome, 19%.

During the month under review, imports amounted to US$457.2 million in June 2019 signifying a 4.7 % rise from US$436.8 million recorded in the prior month.