Zimbabwe: Reserve money grows 7.62% to ZWL$15.4bn on Govt spending

By Almot Maqolo

Reserve money, local banks’ balances sitting with the central bank, rose 7.62% to ZW$15.38 billion as at 9 October 2020 from ZW$14.29 billion on 2 October 2020, the central bank has said.

“Banking sector deposits at the Reserve Bank increased by ZW$1.4 billion, while currency issued increased by ZW$69.5 million. This resulted in reserve money rising by ZW$1.1 billion, to ZW$15.4 billion over the week ending 9 October 2020,” RBZ stated.Government deposits at apex bank declined by 16.33% from ZWL$10.10 billion as at 2 October 2020 to ZWL$8.45 billion.

“Government deposits at the Central Bank declined by ZW$1.7 billion, which had the impact of injecting liquidity at banks, thus contributing to the increase in reserve money during the week under review.”

As part of enhancing the effectiveness of the monetary policy, the southern African nation established the Monetary Policy Committee and new RBZ Board. The central bank has since introduced monetary targeting with a view of containing money supply and hence inflation.

Inflation is projected to slow down significantly, according to the treasury, with average annual inflation projected at 134% during the year 2020. 
The slowdown in inflation will be attributed to deepening of the foreign currency auction market which is expected to sustain exchange rate stability. RBZ is also expected to continue to curtail growth in money supply which is one of the major drivers of inflation.

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