By Alois Vinga
RESERVE Bank of Zimbabwe (RBZ) statistics reveal that foreign currency deposits maintained a sustained decline in the last quarter of 2019 against a backdrop of key reforms, among them, the adoption of the local currency.
According to RBZ monthly economic reports, foreign currency deposits which stood at 42% in September 2019 went down to 39% in the month of October 2019.
“The deposits further declined from 36 % recorded in November 2019 to 34% as of December 31 2019,” the central bank’s reports stated.
The recorded decline corresponds with policy shifts made by government last year under Statutory Instrument 142 which paved way for the Zimbabwe dollar as the sole legal tender in any transaction in Zimbabwe.
Major currencies such as the US dollar, South African rand and Botswana pula were scrapped from a basket of currencies that anchored the Zimbabwean economy in the country’s 10 years of dollarisation.
Market watchers speculate that the trend signifies the erosion of confidence in the banking systems by the country’s public after years of policy inconsistencies which have seen government at one point positioning bond notes at of equal value with US dollar and later on dumping the policy.
However, RBZ governor John Mangudya has since expressed satisfaction over the state of affairs saying this fell within the country’s de-dollarisation framework.
“The foreign currency deposits as a proportion of money supply went down to 37% by 31 December 2019, whilst foreign currency denominated loans in the banking sector stood at 22% of total bank loans and advances as at 31 December 2019,” he said.
Zimbabwe is currently going through the worst economic crisis in a decade with most companies continuing to cry foul over the reintroduction of the Zim-dollar which continues to devalue against the US$.