Vol. 25 No. 23


Week Ending
9th June 2023
Weekly Economic
Highlights
TABLE OF CONTENTS


1.
OVERVIEW

This report provides a comprehensive update on the latest developments in the money and capital
markets for the week ending 9 June 2023. The report also covers developments in the tobacco,
mineral commodities, gold coins and stock markets during the week. The last section of the
report presents an analysis of domestic inflation developments.

The minimum and maximum deposit rates for domestic currency deposits remained unchanged
at their previous week’s levels during the week ending 9 June 2023. The banks also maintained
the structure of deposit rates, short- and long-term deposits, paying higher rates on long-term
deposits. The value and volume of ZWL transactions processed through the National Payment
System (NPS) increased, reflecting higher economic activities. The equity markets continued to
grow during the week under consideration.

The volume of tobacco sales as at the end of the week was 55.17% higher than the volume sold
during the same period in 2022. The turnover realized from the tobacco sales was 54.9% higher
than the US$505.07 million realized during the same period in 2022.

2.
INTEREST RATES

Local Currency (ZWL) Deposit Rates

Minimum and maximum deposit rates for domestic currency deposits of all classes remained
unchanged at their previous week’s levels during the week ending 9th June 2023. Banks
maintained higher deposit rates for the longer-term deposits to attract long-term savings needed
for lending.


Table 1: Average Deposit Rates (per annum)
Date
Savings deposits (%)
1- Month deposit rates (%)

3- Month deposit rates (%)

Minimum (%)
Maximum (%)
Minimum (%)
Maximum (%)
Minimum (%)
Maximum (%)
12-May-23

19-May-23

26-May-23

2-Jun-23

9-Jun-23

Source: Reserve Bank of Zimbabwe, 2023

Local Currency (ZWL) Lending Rates

The minimum ZWL lending rates for both individuals and corporate borrowers were adjusted
upwards during the week reflecting higher credit demand for the banks’ low-risk rated clients.
The maximum ZWL lending rates were reduced for both individuals and corporate borrowers,
which is positive for the low-end segments of the market. The lending rates were as in Table 2.

Table 2: Lending Rates (per annum)
Date
Minimum (%)
Maximum (%)
Minimum (%)
Maximum (%)

Individual Clients

Corporate Clients
12-May-23

19-May-23

26-May-23

2-Jun-23

9-Jun-23

Source: Reserve Bank of Zimbabwe, 2023

Foreign Currency (USD) Deposit Rates


The minimum and maximum deposits rates for all classes of FCA deposits remained unchanged
during the week ending 9th June 2023, as shown in Table 3. The banks continued to offer higher
deposit rates on longer-term FCA deposits to attract long-term foreign currency deposits needed
to support longer-term lending.


Table 3: Average Foreign Currency Deposit Rates (per annum)
Date
Savings deposits (%)
1- Month deposit rates (%)

3- Month deposit rates (%)

Minimum (%)
Maximum (%)
Minimum (%)
Maximum (%)
Minimum (%)
Maximum (%)
12-May-23

19-May-23

26-May-23

2-Jun-23

9-Jun-23

Source: Reserve Bank of Zimbabwe, 2023

Foreign Currency (USD) Lending Rates


During the week ending 9 June 2023, the USD minimum lending rates increased by 0.02 and
0.46 percentage points for individuals and corporate clients, respectively. The increases reflect
higher demand for loans by the low low-risk clients of the banks. The maximum USD lending
rates for individual borrowers were reduced by 0.08 percentage points while the maximum
lending rates for the orate borrowers were increased by 0.19 percentage points during the week
under review as shown in Table 4.

Table 4: Lending Rates (per annum)
Date
Minimum (%)
Maximum (%)
Minimum (%)
Maximum (%)

Individual Clients

Corporate Clients
12-May-23

19-May-23

26-May-23

2-Jun-23

9-Jun-23

Source: Reserve Bank of Zimbabwe, 2023
3.
CLEARING AND SETTLEMENT ACTIVITY

The value of transactions processed through the National Payment System (NPS) increased
during the week under review from ZW$1.74 trillion in the previous week to ZW$2.36 trillion.
The Real Time Gross Settlement (RTGS) increased by 39.97% to ZW$2 trillion, during the
week. The distribution of the NPS transaction in value terms during the week ending 9 June 2023
was distributed as shown in Figure 1.

Figure 1: Composition of NPS Transactions in Value Terms

Source: Reserve Bank of Zimbabwe, 2023


The volume of transactions that went through the NPS during the week under review decreased
by 3.977% to 12.07 million, reflecting higher economic activity. The lower ATM transaction
volumes registered during the week under analysis were partly attributable to Adowntimesmes.
In volume terms, the NPS transactions were distributed as shown in Figure 2.


Figure 2: Composition of NPS Transactions in Volume Terms

Source: Reserve Bank of Zimbabwe, 2023


RTGS
85.16%
POS
6.78%
ATM
2.71%
MOBILE
5.35%
RTGS
POS
ATM
MOBILE
RTGS, 2.17%
POS, 23.26%
ATM, 1.19%
MOBILE, 73.38%
RTGS
POS
ATM
MOBILE

Table 5: National Payment Systems Activity
PAYMENT
STREAM
WEEK ENDING
26th May 2023

WEEK ENDING

2nd May 2023
% CHANGE FROM
LAST WEEK
PROPORTION
%

Values in ZW$ Millions


RTGS

POS

ATM

MOBILE

TOTAL

Volumes


RTGS

POS

ATM

MOBILE

TOTAL

Source: Reserve Bank of Zimbabwe, 2023

4.
TOBACCO SALES
A cumulative total of 259.10 million kilograms of tobacco had been sold as at 9th June 2023, the
58th day of the tobacco selling season. The volume of tobacco sales represented a 55.17%
increase, compared to the 166.97 million kilograms sold during the same period in 2022. The
turnover realized from the sales amounted to US$782.33 million and was 54.90% higher than
the US$505.07 million realized during the same period in 2022, as shown in Table 6.

Table 6: Weekly Cumulative Tobacco Sales: Day 58 (9th June 2023)

Variance (%)
Cumulative Quantity Sold (million kgs)
166,973,588
259,098,162
55.64
Average Price (US$/kg)
3.02

3.02
-0.18
Cumulative value (US$ million)
475,552,777
782,334,436
54,90
Source: Tobacco Industry and Marketing Board (TIMB), 2023

The golden leaf was sold at an average price of US$3.02/kg, during the week under review, up
from US$3.01/kg realized during the same period in 2022.
5.
INTERNATIONAL COMMODITY PRICE DEVELOPMENTS

During the week ending 9th June 2023, weekly average international prices for gold and
palladium remained bearish and marginally eased, while platinum, copper, nickel, and crude oil
rallied from their previous week’s levels. Table 7 shows developments in prices for selected
commodities during the week under review.

Table 7: Metal and Crude Oil Prices for the week ending 2nd June 2023

Gold
Platinum
Palladium
Copper
Nickel
Crude Oil

US$/ounce
US$/ounce
US$/ounce
US$/tonne
US$/tonne
US$/barrel
Weekly Average (29 May -02
June)

05-June

06-June

07-June

08-June

09-June

Weekly Average (05- 09 June)

Weekly Change (%)

Source: BBC, KITCO and Bloomberg 2023

Gold

During the week ending 9th June 2023, gold prices declined by 0.10% to US$1,958.86 per ounce
from US$1,960.87 per ounce in the previous week. Prices were weighed down by an uptick in
U.S. bond yields as well as a strengthening US dollar. The decline was, however, marginal as
investors awaited inflation data and the outcome of the upcoming Federal Reserve policy
meeting for more clarity on the U.S. interest rate path.

Platinum
Platinum prices rose by a marginal 0.40%, from an average of US$1,017.30 per ounce in the
previous week to US$1,021.40 per ounce during the week under review. Prices continued to get
support supply shortages owing to power-related disruptions in top producer, South Africa

Palladium
Meanwhile, palladium prices slumped by 1.32% from a weekly average of US$1,410.10 per
ounce in the previous week to US$1,391.50 per ounce. Palladium prices remained bearish owing
to weak global industrial demand particularly in the auto sector.

Copper
Copper prices continued on a positive trajectory following signs of dwindling inventories,
particularly in China, the world’s largest metals consumer. Resultantly, the red metal’s prices
increased by 1.86%, from an average of US$8,163.20 per tonne to US$8,315.40 per tonne during
the week ending 9th June 2023. Prices are, however, expected to remain rangebound before the
announcement of the Fed’s rate decision.

Nickel
Nickel prices marginally rose by 0.51% from US$21,019.00 per tonne to US$21,125.80 per
tonne, supported by robust demand from China and supply disruptions in Indonesia, which have
limited global supply.
Brent Crude Oil
During the week ending 9th June 2023, crude oil average prices rebounded by 0.78% to
US$75.60 per barrel, from US$75.02 per barrel recorded in the previous week. Prices recovered
following an announcement by Saudi Arabia to cut production by one million barrels a day. This
development more than offset demand woes stemming from recession fears.

6. EXCHANGE RATE DEVELOPMENTS


Interbank Market
The Zimbabwe dollar (ZW$) depreciated on the interbank market by 62%, from an average of
ZW$2,362.54 per US$1 in the previous week to ZW$3,825.12 per US$1, during the week under
review, as is shown in Table 8.

Table 8: Selected Exchange Rates (ZW$ per unit of foreign currency)

USD
ZAR
GBP
BWP
EURO
Weekly Average (29-02 June)

05-June

06-June

07-June

08-June

09-June

Weekly Average (05-09 June)

Appr (-)/Depr (+) (%) of the ZWL

Source: Reserve Bank of Zimbabwe, 2023


7. EQUITY MARKETS


Zimbabwe Stock Exchange

During the week ending 9th June 2023, the Zimbabwe Stock Exchange (ZSE) maintained a
positive momentum for the eighth consecutive week with the ZSE All Share index gaining
56.06% to close the week at 175 785.58 points.

The Top 10, Top 15, and Medium Cap increased by 63.39%, 60.22%, 33.31% and 8.16% to
close the week at 110 293.27 points, 127 407.23 points, 293 876.79 points respectively.

The rise in the mainstream index was a result of share price gains in CBZ Holdings Limited
(101.05%), British American Tobacco Zimbabwe Limited (BAT) (75.09%), ZB Financial
Holdings Limited (74.05%), Meikles Limited (73.45%) and Delta Corporation Limited
(71.90%).

Partially offsetting the aforementioned increases were declines in share prices of Zimbabwe
Newspapers (1980) Limited (26.80%) and Ariston Holdings Limited (5.06%).The increase in
the resource index emanated from a 14.28 % increase in RioZim Limited’s share price during
the week under review.

Table 8: Zimbabwe Stock Exchange Statistics1

All Share
Index
Points
Top 10
index3
(points)


Mining
Index
(points)
Grand
Market
Capitalizat
ion (ZWL
billion)
Market
Turnove
r (ZWL
million)
The
volume
of
Shares
(million)
Top 15
Index3
points
Medium
Cap3
(points)
Small Cap3
(points)


29-May-23

30-May-23

31-May-23

1-Jun-23

2-June-23

9-June-23
175,785.58
110,293.2

127,407.2


75,40
% Change

Source: Zimbabwe Stock Exchange (ZSE), 2023


1 The Zimbabwe Stock Exchange (ZSE) adopted the Global Industry Classification Standards, effective from 1 January 2020.The ZSE indices
constitute the following categories; Top 10 Index; Top 15; Top 25; Medium cap and Small cap Indices.

Figure 3 shows the trend in daily market turnover for the period from 27th April 2022 to 9th
June 2023.


Figure 3: Zimbabwe Stock Exchange All Share and Top 10 Indices
Source: Zimbabwe Stock Exchange, 2023


Market Turnover and Volume


The cumulative value of shares traded increased by 149.67% to ZW$41.05 billion, despite a
decline of 6.73% in the volume of shares traded, amounting to 75.40 million shares. Figure 4
shows the trend in daily market turnover for the period from 21st May 2022 to 9th June 2023.

Figure 4: Daily Market Turnover

Source: Zimbabwe Stock Exchange, 2023


27-Apr-22
21-May-22
14-Jun-22
8-Jul-22
1-Aug-22
25-Aug-22
18-Sep-22
12-Oct-22
5-Nov-22
29-Nov-22
23-Dec-22
16-Jan-23
9-Feb-23
5-Mar-23
29-Mar-23
22-Apr-23
16-May-23
9-Jun-23
All Share Index
Top 10 Index


21-May-22
14-Jun-22
08-Jul-22
01-Aug-22
25-Aug-22
18-Sep-22
12-Oct-22
05-Nov-22
29-Nov-22
23-Dec-22
16-Jan-23
09-Feb-23
05-Mar-23
29-Mar-23
22-Apr-23
16-May-23
09-Jun-23
ZW$ millions
Negotiated deal: 61.16 million Larfage
Cement
Zimbabwe
Limited
shares
exchanged hands at ZW$312.65
Block
Trade:
19.34
million
Hippo Valley Estates Limited
shares
exchanged
hands
at
ZW$247.85/share
Notable Trades: 31.45 million Ariston
Holdings Limited shares and 4.26 million
Delta Holdings Limited shares exchanged
hands
at
ZW$15.02/share
and
ZW$4077/share, respectively.

Market Capitalization


Reflecting improved trading activity on the ZSE, largely informed by heightened speculative
tendencies, market capitalization increased by 55.08%, or ZW$5 191.83 billion worth of
capitalization to close at ZW$14 618.85 billion, compared to the previous week’s position of
ZW$9 426.65 billion. Figure 5 shows ZSE market capitalization developments for the period
from 27th April 2022 to 9th June 2023.

Figure 5: Daily Market Capitalization in ZW$ billions
Source: Zimbabwe Stock Exchange, 2023


Victoria Falls Stock Exchange


The Victoria Falls Stock Exchange (VFEX) was characterised by bearish trading during the week
ending 9th June 2023. Resultantly, the VFEX All Share index lost 0.06% to close at 80.18 points,
compared to 80.22 points recorded in the previous week.

The decline in the VFEX mainstream index was a result of share price losses in First Capital
Bank Limited (23.53%), Africa Sun Limited (7.18%), Axia Corporation Limited (0.62%) and
Padenga Holdings Limited (0.27%)

Partially offsetting the abovementioned share price losses were gains in the share prices of
Innscor Africa Limited (6.82%) and Simbisa Brands Limited (1.97%).

The VFEX cumulative volume and value of shares traded increased by 23.99% and 86.25% to
2.28 million shares and US$1.09 million. This is in comparison to 1.83 million shares and US$


27-Apr-22
21-May-22
14-Jun-22
08-Jul-22
01-Aug-22
25-Aug-22
18-Sep-22
12-Oct-22
05-Nov-22
29-Nov-22
23-Dec-22
16-Jan-23
09-Feb-23
05-Mar-23
29-Mar-23
22-Apr-23
16-May-23
09-Jun-23
Billions

0.58 million registered in the previous week, respectively. Market capitalization, declined by
0.06%, or US$0.75 million worth of capitalization to close at US$1.35 billion, from US$1.35
billion registered in the previous week. Figure 6 shows the trend in the VFEX All Share Index
(ASI) for the period from 27th April 2022 to 9th June 2023.

Figure 6: Victoria Falls Stock Exchange All Share Index
Source: Victoria Falls Stock Exchange, 2023


Johannesburg Stock Exchange (JSE) Developments

The Johannesburg Stock Exchange (JSE) All-share index was 0.25% lower to close at 76,936.11
points during the week under analysis. JSE market capitalization also decreased by 1.46% to
close at ZAR21.82 trillion during the same period.


Table 9: Johannesburg Stock Exchange (JSE) Statistics
Period
All Share Index
Market Capitalization
(points)
(ZAR trillions)
29-May-23
76,613.35
22.36
30-May-23
75,939.46
22.34
31-May-23
75067.47
22.35
1-June-23
75783.25
22.49
2-June-23
77,126.06
21.97
9-June-23
76,936.11
21.65
% Change
-0.25
-1.46
Source: 2023


27-Apr-22
21-May-22
14-Jun-22
08-Jul-22
01-Aug-22
25-Aug-22
18-Sep-22
12-Oct-22
05-Nov-22
29-Nov-22
23-Dec-22
16-Jan-23
09-Feb-23
05-Mar-23
29-Mar-23
22-Apr-23
16-May-23
09-Jun-23

Figure 7: Johannesburg Stock Exchange (JSE) All Share Index
Source:


8.
GOLD COINS

A total amount of ZW$42.4 billion had been purchased in respect of the gold-backed digital
coins by the 9th of June 2023.

Table 10: Digital Gold-Backed Coin Purchases (Volume and Value) As at 09 June 2023


14-May-22
7-Jun-22
1-Jul-22
25-Jul-22
18-Aug-22
11-Sep-22
5-Oct-22
29-Oct-22
22-Nov-22
16-Dec-22
9-Jan-23
2-Feb-23
26-Feb-23
22-Mar-23
15-Apr-23
9-May-23
2-Jun-23

Date
Number
of Bids
Received
Value of Bids
Received
Amount Allotted
Price per
Milligram of
Gold


ZWL


RBZ GOLD-BACKED DIGITAL
TOKENS ISSUE NO. 2/2023
18-May-23

8,063,137,030
8,063,137,030
112,6
RBZ GOLD-BACKED DIGITAL
TOKENS ISSUE NO. 3/2023
26-May-23

8,500,033,263
8,500,033,263
152,46
RBZ GOLD-BACKED DIGITAL
TOKENS ISSUE NO. 4/2023
01-Jun-23

4,516,617,361
4,516,617,361
207,79
RBZ GOLD-BACKED DIGITAL
TOKENS ISSUE NO. 5/2023
08-Jun-23

7,214,378,573
7,214,378,573
388,01
Total ZWL

42,371,503,648
42,371,503,648

9.
RECENT EXCHANGE RATE AND INFLATION DYNAMICS


The economy continues to exhibit strong external sector fundamentals as evidenced by persistent
balance of payments current account surpluses being registered since 2019 and balanced fiscal
performance since 2020. Given the above, the significant depreciation of the local currency
witnessed since March 2023 is largely decoupled from conventional economic fundamentals as
it was also influenced by other dual currency-related dynamics Zimbabwe.

In a normal mono-currency environment, currency instability usually emanates from structural
weaknesses in the economy that include unsustainable fiscal and current accounts deficits. The
resultant monetization of fiscal deficits through financing from the central bank would then
destabilize the exchange rate through excessive financial market liquidity. Similarly,
unsustainable current account deficits may lead to foreign currency shortages that exert pressure
on the exchange rate to depreciate. In addition, high dependency by a country on primary
commodities without adequate foreign reserves exposes the exchange rate to adverse external
shocks and to speculative attacks by rent-seeking.

Contrary to the afore-described conventional causes of currency instability, the country’s fiscal
position has been sustainably maintained at deficits of below 3% with no recourse to Central
Bank financing since 2020. Similarly, the country has been experiencing favourable external
balance as shown by current account surpluses registered since 2019 to date. Precisely, the
country registered foreign currency inflows amounting to US$11.6 billion in 2022, which is the
highest in history. Economic growth prospects for the country are positive with growth estimated
to surpass the initial growth projection underpinning the 2023 National budget of 3.8% in 2023.
Diaspora remittances have been performing well and outweighing increases in imports to support
growth in manufacturing capacity utilization estimated at 56% in 2022.

The country also continues to pursue a tight monetary policy stance since the last half of 2022,
with moderate increases in the local component of the money supply. Relatedly, the growth in
lending in local currency has been low since January 2023 which shows that the monetary
conditions remain tight. Traditionally, the movements in the exchange rate in Zimbabwe have
been closely related to the movements in the local currency component of the money supply.
This, notwithstanding, the recent currency instability saw the exchange rate sharply depreciating
in the face of a merely moderate and normal increase in the local currency component of the

money supply. This, somewhat, suggests a possible decoupling of dual currency exchange
dynamics from money supply growth as shown in Figure 8.

Figure 8: Money Supply and Exchange Rate Developments


The historically observed money supply-exchange rate nexus, therefore, suggests that the
exchange rate should be much lower at around half of what has been observed in the market.
Thus, the current official and parallel exchange rates have overshot their equilibrium levels and
are expected to appreciate or at the very least remain stable in the foreseeable future.

Given the above, the considered view of the Bank is that the current volatility in the exchange
rate reflects the inherent challenges associated with a dual currency system. In a dual currency
system, economic agents trade in both the USD and the local currency. Foreign currency is
demanded for settling both external and domestic transactions and for store-of-value while under
a mono-currency system, foreign currency is mainly reserved for external transactions. Hence
the demand for foreign currency under a dual currency system is insatiably high.

On the supply side, the country experienced a decline in foreign currency receipts due to external
shocks (declining commodity prices) of key minerals such as the Platinum Group of Metals
(PGMs) during the period under review. Although the PGMs prices are yet to reverse, the net
effect on trade flows has since been significantly moderated by the coming in of lithium exports
and the softening of global petroleum, fertiliser, and other import prices.

Annual Growth of ZWL Component of M3
Annual Depreciation

It was also observed during the period under review that the quoting of abnormally depreciated
exchange rates to discourage sales in local currency by some businesses also exerted pressure on
the local unit. This came in the form of a sudden decline in the demand for local currency due to
the implicit rejection and an equivalent increase in demand for foreign currency for settling
domestic transactions. Given, the hysteresis of yesteryear’s hyperinflation, this perpetuated the
self-fulfilling negative inflation and exchange rate expectations.

Given that the current exchange rate volatility is not driven by structural factors and persistent
money supply growth, the Bank is aptly confident that the worst patch is over. In addition, the
recent measures instituted by the Bank, which include the introduction of the wholesale foreign
exchange market to address transitory foreign exchange liquidity in the market and the rolling
out of the second phase of the gold-backed digital coins are expected to buttress exchange rate
stability in the near to short term. Precisely, intervening in the foreign exchange market through
the wholesale auction system is already exerting a dual effect of mopping up excess liquidity and
re-establishing the optimal mix of the dual currencies, thus ensuing exchange rate stability. Given
the above, the Bank encourages all stakeholders, notably retailers, service providers and
Government in all its tiers to accept payments in local currency going forward to boost its
demand, critical for fostering exchange rate stability.


RESERVE BANK OF ZIMBABWE

APPENDIX 1: FOREIGN EXCHANGE AUCTION RESULTS FOR MAINFX2 AND SMEFX 3
Source: Reserve Bank of Zimbabwe, 2023


2 Main Foreign Currency Auction
3 Small and Medium Enterprises Foreign Currency Auction

MAINFX
19-May-23 26-May-23 2-June-2 9-June-23

SMEFX
19-May-23 26-May-23 2-June-23 9-June-23
Total
Bids (US$ dollars)

Amount Allotted
(US$ dollars)

Highest Rate

Lowest Bid
Rate

Lowest Bid Rate
Allotted

Weighted Average
Rate

Number of Bids
Received

Number of Bids
Rejected

APPENDIX 2: SUMMARY OF FOREIGN CURRENCY AUCTION ALLOTMENTS BY PURPOSE
Source: Reserve Bank of Zimbabwe, 2023


Purpose
MAINFX
19-May-23 26-May-23 2-June-23 9-June-23
SMEFX
19-May-23 26-May-23 2-June-23 9-June-23
Raw Materials


Machinery and
Equipment

Consumables
(Incl. Spares,
Tyres,
Packaging)

Pharmaceuticals
and Chemicals

Services
(Loans,
Dividends and
Disinvestments)

Retail and
Distribution
1,514,194.61


Fuel, Electricity
and Gas
-
-
-


Paper and
Packaging

TOTAL

957,712.91