By Alois Vinga
FOREIGN currency deposits continue to sustain an upward trend reaching $127.5 billion in May 2021 partly on the back of deep economic reforms which are restoring confidence in the banking sector.
The latest Reserve Bank of Zimbabwe (RBZ) monthly economic review covering the month of May 2021 shows that foreign currency accounts deposits included in broad money recorded an annual growth of 410.5% from $24.9 billion in May 2020 to $127.5 billion in May 2021.
In the month of April 2021, foreign currency deposits including broad money recorded an annual growth of 409.6%, to $117,77 billion in April 2021.
In the month of February 2021, foreign currency deposits rose to $109.66 billion.
“The increase partly reflected revaluation changes owing to exchange rate movements, from $25 per US$1 in May 2020 to $84, and $73 per US$1 in May 2021. On an annual basis, local currency deposits registered a growth of 356.50%, while currency in circulation increased by 54,87%,” said the RBZ in the report.
On an annual basis, local currency deposits registered a growth of 356,50%, while currency in circulation increased by 54.8%.
Market watchers also believe that the ongoing reforms and policy measures implemented by the RBZ and treasury have spurred confidence prompting members of the public to leave their money in ban accounts.
To this end, several local banks have also confirmed an upsurge in foreign currency deposits and end extension of loans.
During the period under review, domestic credit increased by 5,8% to $158,7 billion attributed to increases in credit to the private sector and net claims to the government, respectively.
“Credit to the private sector was extended towards agriculture, 33.01%; households, 16.36%; distribution, 12.4%; manufacturing, 10,7%; financial organisations, 9.7%; and mining, 7.9%,” the report noted.