Vol. 25 No. 21


Week Ending
26th May 2023
Weekly Economic
Highlights
TABLE OF CONTENTS


1.
OVERVIEW

This weekly report covers money and capital market developments during the week ending 26
May 2023. The weekly also covers developments on tobacco sales and prices. A brief discussion
of the architecture and motivation of the gold-backed digital gold coins, including developments
on their uptake is also provided at the end of the report.

Overall, minimum and maximum deposit rates for deposits of all classes remained at the previous
week’s levels, while minimum lending rates for individual and corporate clients were lower
during the week under review. The lower lending rates partly reflect incentives by banks to
increase access to credit for less risky individuals and corporates. The weekly average prices for
gold, platinum, palladium, copper, and nickel retreated largely on account of lower demand,
while brent crude oil’s weekly average prices surged on the back of declining inventories and
anticipated production cuts.

The week under review also saw an increase in the value of zwl transactions processed through
the National Payment System (NPS) reflecting firm demand for local currency transactions.
Similarly, the equities markets also maintained positive momentum, reflecting the high demand
for value preservation purposes.

2.
INTEREST RATES

Local Currency (ZWL) Deposit Rates

Minimum and maximum deposit rates for deposits of all classes remained at the previous week’s
levels, during the week ending 26th May 2023, as shown in Table 1. Commercial Banks
maintained savings deposit rates marginally above the prescribed 30% per annum during the
period of analysis. Deposit rates for deposits of 1-month and 3-month tenors were, however,
maintained at higher levels compared to the prescribed minimum deposit rates of 50% per annum
as part of measures to attract long-term deposits.

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

3- Month deposit rates (%)

Minimum (%)
Maximum (%)
Minimum (%)
Maximum (%)
Minimum (%)
Maximum (%)
28-Apr-23

5-May-23

12-May-23

19-May-23

26-May-23

Source: Reserve Bank of Zimbabwe, 2023


Local Currency (ZWL) Lending Rates

Commercial bank minimum lending rates for individual and corporate clients were lower during
the week under review. This partly reflects incentives by banks to increase access to credit for
less risky individuals and corporates. Maximum lending rates for both individual and corporate
clients, however, registered increases during the same week.

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

Individual Clients

Corporate Clients
28-Apr-23

5-May-23

12-May-23

19-May-23

26-May-23

Source: Reserve Bank of Zimbabwe, 2023

Foreign Currency (USD) Deposit Rates

Average minimum and maximum deposits rates for all classes of deposits quoted by commercial
banks were unchanged during the week ending 26th May 2023, as shown in Table 3. Commercial
banks continued to offer higher FCA deposit rates to attract long-term foreign currency deposits.

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

3- Month deposit rates (%)

Minimum (%)
Maximum (%)
Minimum (%)
Maximum (%)
Minimum (%)
Maximum (%)
28-Apr-23

5-May-23

12-May-23

19-May-23

26-May-23

Source: Reserve Bank of Zimbabwe, 2023


Foreign Currency (USD) Lending Rates

Minimum commercial bank lending rates for individual clients registered a marginal decrease,
while those for corporate clients were higher during the week under analysis. Maximum lending
rates for individual clients softened while those for corporate clients increased during the week
under review, as shown in Table 4. Lending rates for corporates increased on the back of higher
demand for USD-based credit as well as elevated deposit rates for long-term FCA deposits.

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

Individual Clients

Corporate Clients
28-Apr-23

5-May-23

12-May-23

19-May-23

26-May-23

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

The week under review saw an increase in the value of transactions processed through the
National Payment System (NPS), from ZW$1.15 trillion in the previous week to ZW$1.18
trillion. Real Time Gross Settlement (RTGS) fell by 2.32% to ZW$937.91 billion, during the
same week. The increase in ATM transactions was, in part, on account of firm demand for local

currency bank notes for cash-based transactions. In proportions, NPS transaction values were
distributed as follows: RTGS, 79.18%, POS, 10.46%; Mobile, 7.06%; and ATM, 3.29%.


Figure 1: Composition of NPS Transactions in Value Terms

Source: Reserve Bank of Zimbabwe, 2023


The volume of NPS transactions decreased by 7.90% to 12.49 million, during the week ending
26th May 2023. In volume terms, the NPS transactions were distributed as follows: Mobile,
71.41%; POS, 25.15%; RTGS, 2.01%; and ATM, 1.43%, as shown in Figure 2.


Figure 2: Composition of NPS Transactions in Volume Terms

Source: Reserve Bank of Zimbabwe, 2023


RTGS
79.18%
POS
10.46%
ATM
3.29%
MOBILE
7.06%
RTGS
POS
ATM
MOBILE
RTGS, 2.01%
POS, 25.15%
ATM, 1.43%
MOBILE, 71.41%
RTGS
POS
ATM
MOBILE

Table 5: National Payment Systems Activity
PAYMENT
STREAM
WEEK ENDING
19th May 2023

WEEK ENDING

26th 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
As at 26th May or day 53 of the 2023 tobacco selling season, a cumulative total of 227.37 million
kilograms of tobacco had been sold. This represented a 53.27% increase, compared to the 148.35
million kilograms sold during the comparable period in 2022. Turnover realized from the sales
amounted to US$683.81 million and was 53.50% higher than the US$445.48 million recorded
during the corresponding period in 2022, as shown in Table 6.

Table 6: Weekly Cumulative Tobacco Sales: Day 53 (26th May 2023)

Variance (%)
Cumulative Quantity Sold (million kgs)
148,345,819
227,370,830
53.27
Average Price (US$/kg)
3.00

3.01
0.25
Cumulative value (US$ million)
445,478,146
683,814,322
53.50
Source: Tobacco Industry and Marketing Board (TIMB), 2022

The golden leaf was sold at an average price of US$3.01/kg, during the week under review, up
from US$3.00/kg realized during the same period in 2022. The better performance of the current
season points to increased contribution of the golden leaf towards exports and GDP growth.
5.
INTERNATIONAL COMMODITY PRICE DEVELOPMENTS

During the week ending 26th May 2023, weekly average prices for gold, platinum, palladium,
copper and nickel retreated largely on account of lower demand while Brent crude oil weekly
average prices surged on the back of declining inventories and anticipated production cuts by
OPEC. Table 7 shows commodity prices developments during the week under analysis.

Table 7: Metal and Crude Oil Prices for the week ending 26th May 2023

Gold
Platinum
Palladium
Copper
Nickel
Crude Oil

US$/ounce
US$/ounce
US$/ounce
US$/tonne
US$/tonne
US$/barrel
Weekly Average (15 -19 May)

22-May

23-May

24-May

25-May

26-May

Weekly Average (22 -26 May)

Weekly Change (%)

Source: BBC, KITCO and Bloomberg 2023

Gold

Gold prices retreated by 1.17%, from a weekly average of US$1,987.22 per ounce in the previous
week to US$1,963.88 per ounce, during the week ending 26th May 2023. Prices eased following
optimism on the possibility of an agreement in the US debt-ceiling talks as well as the
appreciation of the US dollar. These developments dampened the demand for precious metals as
alternative investment assets.

Platinum
Platinum prices eased by 1.87%, from an average of US$1,066.80 per ounce in the previous
week to US$1,046.80 per ounce, during the week under review. Prices were weighed down by
the global shortage of the metal owing to supply disruptions the in top producer, South Africa
due to on-going intermittent power outages.

Palladium
During the week ending 26th May 2023, palladium prices declined by 3.30%, from US$1,501.50
per ounce recorded in the prior week to US$1,451.90 per ounce. Prices continued to decline
owing to sluggish industrial demand and a stronger U.S dollar.

Copper
Copper prices remained bearish, declining by 2.20% from US$8,199.30 per tonne recorded in
the previous week to US$8,019.10 per tonne, during the week under analysis. The sustained drop
in prices was mainly underpinned by growing concerns over slowing global economic recovery,
as well as the strengthening of the US dollar.

Nickel
Nickel prices declined by 1.08%, from a weekly average of US$21,247.00 per tonne in the
previous week to US$21,017.00 per tonne, during the week under review. This was attributable
to robust nickel supplies on the global market.

Brent Crude Oil
The week ending 26th May 2023 saw crude oil average prices increase by 2.63%, from US$75.62
per barrel recorded in the previous week to US$77.61 per barrel. The firming of prices was on
account of the unexpected decline in U.S. crude oil inventories and hints by Saudi Arabia on the
likelihood of further production cuts by the OPEC group.
6.
EXCHANGE RATE DEVELOPMENTS


Interbank Market
On the interbank market, the Zimbabwe dollar (ZW$) depreciated by 24% from an average of
ZW$1,352.88 per US$1 in the previous week to ZW$1,677.85 per US$1, during the week ending
26th May 2023, as shown in Table 2. The depreciation of the domestic currency was on the back
of the ongoing refinements of the foreign exchange markets.

Table 2: Selected Exchange Rates (ZW$ per unit of foreign currency)

USD
ZAR
GBP
BWP
EURO
Weekly Average (15-19 May)

22-May

23-May

24-May

26-May

Weekly Average (22-26 May)

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

Source: Reserve Bank of Zimbabwe, 2023


7.
EQUITY MARKETS


Zimbabwe Stock Exchange
During the week ended 26th May 2023, the Zimbabwe Stock Exchange (ZSE) maintained
positive momentum for the sixth consecutive week. As a result, the ZSE All Share index gained
15.18% to close at 95 855.52 points. The Top 10, Top 15, Medium Cap and Small Cap indices

increased by 14.78%, 14.44%, 16.77% and 2.54% to close the week at 58 658.40 points, 68
001.48 points, 174 985.37 points and 981 163.76 points, respectively.

The increase in the mainstream index was a result of share price gains in ZB Financial Holdings
Limited (74.80%), CBZ Holdings Limited (72.76%), Starafrica Corporation Limited (42.51%),
CFI Holdings Limited (32.25%) and Dairibord Holdings Limited (32.23%). Partially offsetting
the stock increases were declines in Zimplow Holdings Limited (10.82%), Ecocash Holdings
Zimbabwe Limited (9.96%), Tanganda Tea Company Limited (3.01%), British American
Tobacco Zimbabwe Limited (0.21%) and Meikles Limited (0.02%). In overall terms, the
resource index remained unchanged at 46 035.02 points during the week.

Table 8: Zimbabwe Stock Exchange Statistics1

All Share
Index
Points
Top 10
index3
(points)


Mining
Index
(points)
Grand
Market
Capitali
zation
(ZWL
billion)
Market
Turnover
(ZWL
million)
The
volume
of
Shares
(million)
Top 15
Index3
points
Medium
Cap3
(points)
Small Cap3
(points)


21-Apr-23


3,072.77
4,533.80
17.53
28-Apr-23


3,482.41
6,089.54
33.55
5-May-23


4,243.78
2,851.78
19.35
12-May-23


5,352.11
5,847.96
69.79
19-May-23


26-May-23


% Change


Source: Zimbabwe Stock Exchange (ZSE), 2023

Figure 3 shows the trend in daily market turnover for the period from 13th April 2022 to 26th May
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: Zimbabwe Stock Exchange All Share and Top 10 Indices
Source: Zimbabwe Stock Exchange, 2023


Market Turnover and Volume

The cumulative volume of shares traded decreased by 76.52% to 10.26 million during the week
ending 26th May 2023, from 43.69 million recorded in the prior week. The turnover value of
shares amounted to ZW$6.87 billion, representing a decrease of 40.04% from ZW$11.46 billion
recorded in the previous week. Figure 4 shows the trend in daily market turnover for the period
from 6th April 2022 to 26th May 2023.

Figure 4: Daily Market Turnover
Source: Zimbabwe Stock Exchange, 2023


13-Apr-22
7-May-22
31-May-22
24-Jun-22
18-Jul-22
11-Aug-22
4-Sep-22
28-Sep-22
22-Oct-22
15-Nov-22
9-Dec-22
2-Jan-23
26-Jan-23
19-Feb-23
15-Mar-23
8-Apr-23
2-May-23
26-May-23
All Share Index
Top 10 Index


13-Apr-22
07-May-22
31-May-22
24-Jun-22
18-Jul-22
11-Aug-22
04-Sep-22
28-Sep-22
22-Oct-22
15-Nov-22
09-Dec-22
02-Jan-23
26-Jan-23
19-Feb-23
15-Mar-23
08-Apr-23
02-May-23
26-May-23
ZW$ millions
Negotiated deal: 61.16 million Larfage
Cement
Zimbabwe
Limited
shares
exchanged hands at ZW$312.65

Market Capitalization

In line with developments on the ZSE during the week under review, the local bourse gained
ZW$1.02 trillion, or 14.80% worth of capitalization to close at ZW$7.95 trillion, compared to
ZW$6.92 trillion, recorded in the previous week. Figure 5 shows ZSE market capitalization
developments for the period from 13th April 2022 to 26th May 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 26th May 2023. Resultantly, the VFEX All Share index lost 1.53% to close at 82.89 points,
compared to 84.18 points recorded in the previous week.

The decline in the VFEX mainstream index emanated from share price declines in Axia
Corporation Limited (2.14%), Simbisa Brands Limited (0.32%), Innscor Africa Limited (0.24%)
and Padenga Holdings Limited (0.09%). Partially offsetting the share price losses were gains
registered in the share price of Nedbank Group Limited Zimbabwe (10.09%), African Sun
Limited (0.79%), SeedCo International (0.15%), and National Foods Holdings Limited (0.13%).

The VFEX cumulative volume and value of shares traded increased by 113.89% and 114.71%
to 1.85 million shares and US$0.83 million, respectively. Market capitalization, gained 4.76%,
or US$0.06 billion worth of capitalization to close at US$1.40 billion, compared to US$1.33


13-Apr-22
07-May-22
31-May-22
24-Jun-22
18-Jul-22
11-Aug-22
04-Sep-22
28-Sep-22
22-Oct-22
15-Nov-22
09-Dec-22
02-Jan-23
26-Jan-23
19-Feb-23
15-Mar-23
08-Apr-23
02-May-23
26-May-23
Billions

billion recorded in the previous week. Figure 6 shows the trend in the VFEX All Share Index
(ASI) for the period from 13th April 2022 to 26th May 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 2.03% lower to close at 76,589.54
points during the week under analysis. JSE market capitalization also decreased by 2.98% 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)
21-Apr-23
77,910.96
22.35
28-Apr-23
78,021.87
22.36
5-May-23
78,132.77
22.34
12-May-23
78,330.20
22.35
19-May-23
78,175.82
22.49
26-May-23
76,589.54
21.82
% Change

-2.03

-2.98
Source: 2023


13-Apr-22
07-May-22
31-May-22
24-Jun-22
18-Jul-22
11-Aug-22
04-Sep-22
28-Sep-22
22-Oct-22
15-Nov-22
09-Dec-22
02-Jan-23
26-Jan-23
19-Feb-23
15-Mar-23
08-Apr-23
02-May-23
26-May-23

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


8.
POTENTIAL OF GOLD-BACKED DIGITAL TOKENS

The potential of gold-backed digital tokens to transform the investment and currency markets is
becoming more evident from the favourable uptake and appetite for the tokens since their
introduction in May 2023. The sovereign backing of these tokens by gold, a safe haven product,
adds to their attractiveness. Importantly, the gold coins have provided a new monetary policy
tool for the Bank through their mopping of excess liquidity of the domestic currency. The
divisibility nature of the gold-backed digital coins has enhanced access and affordability by the
economic agents across all income brackets and this is critical in promoting financial and
economic inclusion across the country.

A total amount of ZW$30.6 billion had been purchased in respect of the gold-backed digital
coins as at 26 May 2023. Figure 8 shows the amount and value of digital gold-backed coins
purchased since its introduction.


7-May-22
31-May-22
24-Jun-22
18-Jul-22
11-Aug-22
4-Sep-22
28-Sep-22
22-Oct-22
15-Nov-22
9-Dec-22
2-Jan-23
26-Jan-23
19-Feb-23
15-Mar-23
8-Apr-23
2-May-23
26-May-23

Figure 8: Digital Gold-Backed Coin Purchases (Volume and Value) As at 26 May 2023


As indicated in the Monetary Policy Committee (MPC) Press Statement of 6 June 2023, the Bank
will be rolling out the gold-backed digital coins for transactional purposes in Phase II of their
issuance. Importantly, the rolling out of Phase II will allow holders of excess ZWL balances an
alternative option to lock value in gold-backed tokens, thus offering protection against price
volatility. This process will inadvertently reduce the appetite for the demand of USD for storeof-value purposes and in the process help to stabilise the value of the ZWL. The flow chart below
shows the envisaged mechanisms of the gold-backed digital tokens.


12-May-23
18-May-23
26-May-23
ZW$Billion
KGs
Cum. Coin Purchases (ZW$) (RHS)
Cum. Coin Purchases (KGs)

The gold coins have multiple potential benefits to the economy over and above their use as an
effective liquidity-mopping instrument of the central bank. Because the coins have intrinsic value
by themselves or in their representation form as digital gold-backed coins, they are a credible
and stable asset available for economic agents to hedge against inflation and exchange rate
depreciation. They are an appropriate and effective value-preserving asset. In the history of the
use of gold coins under the Gold Standard, the system is hailed for its ability to stabilize inflation
before a country can introduce its currency. They restrict inflationary seigniorage, which is not
supported by real economic activity. The gold coins, therefore, are an appropriate policy
instrument and an asset to fight inflation and exchange rate instability.

The rolling out of digital gold-backed coins for transactional purposes has further benefits for
the country. In their digital form, the coins are easily usable as a medium of exchange with
minimum risks of counterfeiting or debasing, theft, destruction, and transactional abuse. The
coins become more divisible and able to facilitate small-value transactions. The digital goldbacked coins can easily be integrated into the country’s interoperability system to allow for the
settlement of transactions that are done between and across different banks and or mobile money
platforms both within the economy and externally. The transactional misuse of physical coins or
money in facilitating illicit transactions is limited by the use of digital coins.


Figure 9: Digital Gold Tokens -Flow Chart for phase 1&2 of their issuance

It is important to note that gold-backed digital tokens are not a new currency but would be a
near-perfect substitute for cash and will be easily usable for day-to-day transactions. In essence,
the gold-backed digital tokens will be akin to a Central Bank Digital Currency CBDC) for
Zimbabwe settled in both the ZWL and USD consistent with the dual currency nature of the
economy.


RESERVE BANK OF ZIMBABWE

APPENDIX 1: FOREIGN EXCHANGE AUCTION RESULTS FOR MAINFX2 AND SMEFX3
Source: Reserve Bank of Zimbabwe, 2023


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

MAINFX
5-May-23 12-May-23 19-May-23 26-May-23

SMEFX
5-May-23 12-May-23 19-May-23 26-May-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
5-May-23 12-May-23 19-May-23 26-May-23
SMEFX
5-May-23 12-May-23 19-May-23 26-May-23
Raw Materials


Machinery and
Equipment

Consumables
(incl. Spares,
Tyres, and
Packaging)

Pharmaceuticals
and Chemicals

Services
(Loans,
Dividends and
Disinvestments)

Retail and
Distribution

Fuel, Electricity
and Gas

Paper and
Packaging

TOTAL

957,712.91