Zim’s foreign currency generation sustains growth

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By Alois Vinga

OVERALL foreign currency performance  has registered growth, with deposits recording a 139% increase, in what market watchers believe to be an indicator of relative confidence in the country’s banking sector.

Latest Reserve Bank of Zimbabwe (RBZ) statistics show that despite exchange rate depreciation, there was a significant improvement in the foreign currency deposits on a yearly basis.

“The growth in foreign currency deposits, from ZW$115, 04 billion in March 2021 to ZW$275, 17 billion in March 2022, is partly due to exchange rate depreciation. The increase in foreign currency deposits partly reflected the impact of exchange rate depreciation,” the central bank said.

RBZ records also show that foreign currency generation has seen the country realising US$2,4 billion in receipts during the first quarter of 2022, an increase of 15,9% compared to foreign currency generated during the same period in 2021

In the first quarter, the value of Zimbabwe’s total export earnings rose 16% to US$1,546 billion in the first four months of this year from US$1,331 billion received in the prior comparative period on the back of strong commodity prices and increase in international remittances.

International remittances rose 27% to US$629.6m in the first quarter of the year from US$493.9m recorded during the same period last year with diaspora remittances jumping 29% to US$388 million as at March 31 2022, compared to US$300, 7 million.

However, commenting on the performance, economist, Doctor Godfrey Kanyenze, attributed the good performance to the consistency exhibited by monetary authorities on the protection of US$ deposit accounts, among other factors.

“The commitment by the government to respect US$ Nostro accounts, which has been respected to date, has gone a long way to boost confidence, which has seen a surge in the foreign currency deposits.

“But other foreign currency performances during the period up to the end of the 2022 first quarter are a reflection of the recovery of the global economies following the easing of the Covid19 restrictions on the back of rigorous vaccination campaigns,” he said.

The renowned economist also attributed the good rainfall received in the 2020-21 agricultural season as one of the pillars which contributed to the good foreign currency revenue.