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    Broad money M-o-M growth due to weakening currency: RBZ

    By ETimes


    In the month of March, broad money amounted to $589.09 billion, compared to $506.13 billion in February 2022 representing a 16.39% growth month on month, according to the Reserve Bank of Zimbabwe (RBZ) latest monthly statistics.
     
    The broad money was largely composed of local currency deposits which constituted 52.74% and foreign currency deposits was 42.78% of the money stock. A paltry 0.55% of total money supply is in circulation.
     
    An increase of $49.39 billion and $26.28 billion in foreign currency and local currency transferable deposits, respectively was the main reason for broad money growth according to the apex bank. The bank also acknowledged that a weakening local currency contributed to an increase in foreign currency holdings.
     
    RBZ said, “The increase in foreign currency deposits partly reflected the impact of exchange rate depreciation.”
     
    During the month of March 2022, net domestic claims increased by 13.73% to $425.90 billion and the growth was largely due to increases of $47.71 billion and $5.85 billion in credit to the private sector and net claims on Government, respectively.
     
    On an annual basis, broad money registered a growth of 151.45%, down from 384.02% in March 2021. However, the local currency component of broad money grew by 163.27%; while foreign currency deposits increased by 139.20%.
     
    The growth in foreign currency deposits, from $115.04 billion in March 2021 to $275.17 billion in March 2022, was partly due to exchange rate depreciation.
     
    “The annual growth in broad money was largely due to increases of 311.06% and 230.58% in net claims on Government and credit to the private sector, respectively. Banking sector credit to Government was mainly in the form of Treasury bill holdings by banks,” the Bank said.
     
    Agriculture dominated private sector credit in March as farmers geared up for winter wheat planting and summer crops harvesting.
    Of credit given to the private sector, agriculture accounted for 25.45% of total credit with household credit coming in a close second at 22.40%.


     
    The manufacturing and distribution sectors also received 12.49% and 11.37% of private sector credit, respectively, while the remainder of credit for the rest of the economic sectors.


     
    According to RBZ credit to the private sector was largely channeled towards inventory build-up at 32.64%, with other recurrent expenditures accounting for 30.38% and fixed capital investments accounted for 16.15%.
     
    This comes as Zimbabwe is targeting to produce 383 000 metric tonnes (MT) of winter wheat for the 2022/23 season, up from 337 000MT achieved last year riding on increased hecterage.
     
    The country requires between 350 000 and 450 000 tonnes annually, but produced 337 000MT during the 2021 winter wheat season.
     
    The 2022 winter wheat production plan is targeting at least 75 000 hectares up from a total hectarage of 66 435 hectares planted last year. At this level of production, the country is assured of achieving national self-sufficiency – Harare

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