Zim’s Currency Generation Supports Growth

By Alois Vinga

GLOBAL foreign currency performance recorded growth, with deposits registering a 139% increase, which market watchers regard as an indicator of relative confidence in the country’s banking sector.

The latest statistics from the Reserve Bank of Zimbabwe (RBZ) show that despite the depreciation of the exchange rate, there has been a significant improvement in foreign currency deposits on an annual basis.

“The growth in foreign currency deposits, which increased from Z$115.04 billion in March 2021 to Z$275.17 billion in March 2022, is partly due to the depreciation of the exchange rate. The increase in foreign currency deposits partly reflects the impact of exchange rate depreciation,” the central bank said.

RBZ records also show that foreign currency generation saw the country achieve $2.4 billion in revenue during the first quarter of 2022, an increase of 15.9% from foreign currency generated during the same period in 2021.

In the first quarter, the value of Zimbabwe’s total export earnings increased by 16% to $1.546 billion in the first four months of this year from $1.331 billion received in the previous comparative period. , thanks to strong commodity prices and increased international remittances.

International remittances increased by 27% to $629.6 million in the first quarter of the year, compared to $493.9 million recorded during the same period last year, remittances from the Diaspora jumped 29% to $388 million as of March 31, 2022, from $300.7 million. .

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

“The government’s commitment to respecting US dollar Nostro accounts, which has been upheld to date, has been instrumental in boosting confidence, which has seen an increase in foreign currency deposits.

“But other foreign exchange performance in the period to the end of the first quarter of 2022 reflects the recovery of global economies following the easing of Covid19 restrictions following rigorous vaccination campaigns,” a- he declared.

The renowned economist also attributed the good rainfall received during the 2020-21 agricultural season as one of the pillars that contributed to the good foreign exchange earnings.