Foreign currency deposits reach US$1.94 billion

By Alois Vinga

Foreign Currency Accounts (FCA) deposits grew by 103.13% in 2021, according to the latest statistics from the Reserve Bank of Zimbabwe (RBZ).

FCA balances fell from US$1.27 billion in December 2020 to US$1.94 billion in December 2021, indicating renewed confidence in the country’s banking sector.

“Revaluation due to exchange rate movements also contributed to the increase in the local currency equivalent of FCA deposits,” the RBZ said.

The annual growth in broad money supply was largely due to increases of 574.75% and 270% in claims on other financial corporations and net claims on government, respectively. Banking sector credit to the government has mainly taken the form of treasury bills held by banks.

During the period, credits to the private sector increased by 198.58%, while claims on public non-financial corporations increased by 190.54%.

Credit to the private sector mainly benefited the agriculture and household sectors, which received 29.14% and 23.22% of total credit respectively.

The retail and manufacturing sectors also received 13.19% and 11.88% respectively, while the credit shares for the rest of the economic sectors are shown.

“On an annual basis, broad money grew by 131.83%, compared to 485.55% in December 2020. The component of local currency deposits in broad money increased by 161.21% says the stats.

The developments come against a backdrop of the government implementing a series of economic measures, including the reduction of public expenditure, the creation of the Reserve Bank of Zimbabwe currency auction system, which have largely contributed to mitigating the both exchange rate volatility and inflation.

As a result, guaranteed access to foreign currency in bank accounts has also contributed significantly to boosting public confidence in the banking sector.

During the reporting period, cash transactions increased to reach Z$23.60 billion in December 2021.

The value of mobile and internet transactions fell to ZW$298.98 billion in December 2021 from ZW$315.43 billion the previous month with card transactions Card transactions increased by 19.22% to reach ZW$72.61 billion, in the month analyzed.