Vol. 25 No. 42


Week Ending
20th October 2023
Weekly Economic
Highlights
TABLE OF CONTENTS


BEYOND INFLATION NUMBERS - THE CASE OF

1. OVERVIEW

This report provides an analysis of the developments in the money and capital markets for the
week ending 20th October 2023. The report also covers an article on Skimpflation which is a
trend where businesses reduce the quality of products or services for the same price.

The Zimbabwe Stock Exchange (ZSE) exhibited bullish sentiment, while the Victoria Falls Stock
Exchange (VFEX) was characterised by bearish sentiment, during the week under analysis. The
country’s National Payment Systems (NPS) processed transactions valued at ZW$5,4 trillion
during the reporting week, up by 6.01% from the value of transactions processed during the week
ending 13th October 2023.

Minimum and maximum deposit rates for foreign currency deposits remained unchanged, during
the week ending 20th October 2023. In the same week, international commodity prices for gold,
platinum, and crude oil increased, while those for palladium, copper, nickel, and lithium
decreased.
2. INTEREST RATES

Local Currency (ZW$) Deposit Rates

During the week ending 20th October 2023, minimum and maximum deposit rates for all deposit
classes remained largely unchanged. The average deposits rates are shown in Table 1.

Table 1: Average Deposit Rates (per annum)
Date
Savings deposits

1- Month deposit
rates

3- Month deposit
rates

6- Month deposit
rates

12- Month deposit
rates

Minimum
(%)
Maximum
(%)
Minimum
(%)
Maximum
(%)
Minimum
(%)
Maximum
(%)
Minimum
(%)
Maximum
(%)
Minimum
(%)
Maximum
(%)
22-Sep-23


29-Sep-23

6-Oct-23
34.29
35.60
59.00


13-Oct-23

20-Oct-23

Source: Reserve Bank of Zimbabwe, 2023

Local Currency (ZW$) Lending Rates

Minimum lending rates for both individual and corporate clients decreased, during the week
under analysis. Maximum lending rates for individual clients registered a marginal increase of
0.09 percentage points to 101.61%, while those for corporate clients marginally declined by 0.4%
to 165.53%. The lending rates are shown in Table 2.


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

Individual Clients

Corporate Clients

22-Sep-23

29-Sep-23

6-Oct-23

13-Oct

20-Oct

Source: Reserve Bank of Zimbabwe, 2023

Foreign Currency (USD) Deposit Rates

During the week under review, minimum and maximum FCA deposit rates for all deposit classes
remained unchanged. The average foreign currency deposits rates are shown in Table 3.

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

3- Month deposit rates

6-Month deposit rates

12- Month deposit
rates

Minimum
(%)
Maximum
(%)
Minimum
(%)
Maximum
(%)
Minimum
(%)
Maximum
(%)
Minimum
(%)
Maximum
(%)
Minimum
(%)
Maximum
(%)
22-Sep-23

29-Sep-23


6-Oct-23

13-Oct-23

20-Oct-23

Source: Reserve Bank of Zimbabwe, 2023

Foreign Currency (USD) Lending Rates
Minimum and maximum foreign currency lending rates for individual clients registered marginal
increases, during the week under analysis. Minimum foreign currency lending rates for corporate
clients softened marginally, while maximum lending rates for the same category of customers
registered a marginal increase, during the week under analysis.

Table 4: Lending Rates (per annum)

Minimum (%)
Maximum (%)
Minimum (%)
Maximum (%)

Individual Clients
Corporate Clients

22-Sep-23

29-Sep-23

6-Oct-23

13-Oct-23

20-Oct-23

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

The total value of transactions processed through the National Payment Systems (NPS) stood at
ZW$5.41 trillion, during the week ending 20 October 2023, representing an increase of 6.01%
from the previous week. Transactions processed through the Real Time Gross Settlement
(RTGS) system rose by 8.3% to ZW$4.6 trillion, during the reporting week. The distribution of
NPS transactions, in value terms, was as follows: RTGS, 85.17%; Mobile, 5.34%, Point of Sale
(POS), 5.31% and Automated Teller Machines (ATM), 4.18%, as shown in Figure 1.

Figure 1: Composition of NPS Transactions in Value Terms

Source: Reserve Bank of Zimbabwe, 2023


RTGS
85.17%
POS
5.31%
ATM
4.18%
MOBILE
5.34%
RTGS
POS
ATM
MOBILE

The volume of transactions processed through the NPS decreased by 6.22% to close at 11.53
million, largely due to decreases in RTGS and mobile transaction volumes. The NPS transaction
volumes were distributed as follows: Mobile, 80.71%; POS, 16.57%; ATM, 1.34%; and RTGS,
1.38%, as shown in Figure 2.

Figure 2: Composition of NPS Transactions in Volume Terms

Source: Reserve Bank of Zimbabwe, 2023

Table 5: National Payment Systems Activity
PAYMENT
STREAM
WEEK ENDING
13 OCTOBER 2023
WEEK ENDING
20 OCTOBER 2023
% CHANGE
FROM LAST
WEEK
PROPORTION

VALUES IN DOLLARS

RTGS

POS

ATM

MOBILE

TOTAL


VOLUMES

RTGS

POS

ATM

MOBILE

TOTAL

Source: Reserve Bank of Zimbabwe, 2023


RTGS, 1.38%
POS, 16.57%
ATM, 1.34%
MOBILE, 80.71%
RTGS
POS
ATM
MOBILE

4. INTERNATIONAL COMMODITY PRICE DEVELOPMENTS


During the week under review, international commodity prices for gold, platinum, and crude oil
increased, while palladium, copper, nickel, and lithium prices decreased, as shown in Table 6.

`Table 6: Metal and Crude Oil Prices for the week ending 20th October 2023

Gold
Platinum
Palladium
Copper
Nickel
Crude Oil
Lithium

US$/ounce
US$/ounce
US$/ounce
US$/tonne
US$/tonne
US$/barrel
US$/tonne

Weekly Average
(09 - 13 Oct)

16-Oct

17-Oct

18-Oct

19-Oct

20-Oct

Weekly Average
(16 - 20 Oct)

Weekly Change (%)

Source: BBC, KITCO and Bloomberg 2023

Precious Metals
During the week under review, there were upward and downward movements in prices of
precious metals. Gold and platinum prices increased by 4.02% and 1.04%, respectively, in large
part, due to geopolitical tensions in the Middle East arising from the Israel-Hamas conflict. In
addition, heightened demand and investor anticipation of a potential interest rate pause by the
U.S. Federal Reserve, in the forthcoming November 2023 meeting, also boosted prices of gold
and platinum.

Palladium and lithium prices declined by 2.34% and 2.71%, respectively, during the reporting
week. The decrease in palladium prices followed the reduction in use of the precious metal within
catalytic converters, primarily driven by the expanding market presence of electric vehicles.
Similarly, the drop in lithium prices was attributable to the decline in demand for fully electric
cars in China and other markets, primarily due to the impact of increasing interest rates and
inflationary pressures. The weekly precious metal price developments are shown in Figure 3.

Figure 3: Weekly Precious Metals Price Developments (14 Oct. 2023 - 20 Oct. 2023)


Source: Kitco,2023

Source: Kitco,2023

Source: Kitco,2023

Source: London Metal Exchange,2023

Base Metals and Brent Crude Oil
During the week ending 20 October 2023, prices of copper and nickel decreased by 1.18% and
0.77%, respectively. However, Brent crude oil prices rose by 4.06%, during the same week. The
decline in base metal prices was largely due to increased inventories, indicating that production
was surpassing demand. Brent crude oil prices maintained a positive momentum, supported by
tensions in the Middle East. Figure 4 illustrates the daily movements of copper, nickel, and crude
oil prices, during the week under review.


US$/ounce
Gold
Gold
Linear (Gold)

US$/ounce
Platinum
Platinum
Linear (Platinum)

US$/ounce
Palladium
Palladium
Linear (Palladium)

US$/tonne
Lithium Hydroxide
Lithium Hydroxide
Linear (Lithium Hydroxide)

Figure 4: Daily commodity price developments for copper, nickel and brent crude oil (14
Oct. 2023 - 20 Oct. 2023)

Source: London Metal Exchange,2023

Source: London Metal Exchange,2023

Source: BBC,2023


14-Oct
15-Oct
16-Oct
17-Oct
18-Oct
19-Oct
20-Oct
US$/tonne
13-Oct
16-Oct
17-Oct
18-Oct
19-Oct
20-Oct
Copper

Copper
Copper
Linear (Copper)

14-Oct
15-Oct
16-Oct
17-Oct
18-Oct
19-Oct
20-Oct
US$/tonne
13-Oct
16-Oct
17-Oct
18-Oct
19-Oct
20-Oct
Nickel

Nickel
Nickel
Linear (Nickel)

14-Oct
15-Oct
16-Oct
17-Oct
18-Oct
19-Oct
20-Oct
US$/barrel
13-Oct
16-Oct
17-Oct
18-Oct
19-Oct
20-Oct
Brent crude oil

Brent crude oil
Brent crude oil
Linear (Brent crude oil)

Exchange Rate Developments
Interbank Market
During the reporting week, the Zimbabwe dollar (ZW$) depreciated by 1.31% against the US
dollar on the interbank market. The average exchange rate rose from ZW$ 5,577.17 per US$1
during the week ending 13 October 2023 to ZW$ 5,650.45 per US$1 for the week ending 20
October 2023. Table 7 shows the movement in the ZW$ exchange rate against selected
currencies.

Table 7: Selected Exchange Rates (ZW$ per unit of foreign currency)

USD
ZAR
GBP
BWP
EURO
Weekly Average (09 - 13 Oct)

16-Oct

17-Oct

18-Oct

19-Oct

20-Oct

Weekly Average (16 - 20 Oct)

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

Source: Reserve Bank of Zimbabwe, 2023


5. EQUITY MARKETS

During the week ending 20th October 2023, the Zimbabwe Stock Exchange (ZSE) exhibited
bullish sentiments for the fourth consecutive week, while the Victoria Falls Stock Exchange
(VFEX) was characterised by bearish sentiment. As a result, the ZSE All Share index increased
by 4.79% to close at 145 265.26 points, while the VFEX All Share index shed 4.48% to 68.21
points.

Zimbabwe Stock Exchange (ZSE) Developments
The Top 10, Top 15, Medium and Small Cap indices added 5.10%, 4.82%, 4.32% and 30.50%
to close at 64 233.90 points, 86 766.93 points, 590 667.03 points and 4 925 114.22 points.

Figure 5 shows developments on the ZSE’s All Share, Top 10 and Mining indices for the period
from 21st October 2022 to 20th October 2023.

Figure 5: ZSE All Share, Top 10 and Mining Indices

Source: Zimbabwe Stock Exchange, 2023

The growth in the mainstream index resulted from share price increases for First Mutual
Holdings Limited (46.23%), Truworths Limited (30.91%), Willdale Limited (30.91%), CBZ
Holdings Limited (22.56%) and Meikles Limited (17.88%).

Declines were registered in the share prices of NMBZ Holdings Limited (8.82%), British
American Tobacco Zimbabwe Limited (6.35%), Edgars Stores Limited (5.29%), Zimre Holdings
Limited (5.05%) and Turnall Holdings Limited (25.18%). The resource index remained
unchanged at 125 531.67 points, during the week under analysis.

Market Turnover
The cumulative volume and value of shares traded on the ZSE fell by 25.31% and 33.92% to
7.13 million shares and ZW$3 324.52 million, compared to 9.54 million shares and ZW$5 031.41
million recorded in the prior week, respectively.

Figure 6 shows the trend in daily market turnover for the period from 21st October 2022 to 20th
October 2023.


21-Oct-22
04-Nov-22
18-Nov-22
02-Dec-22
16-Dec-22
30-Dec-22
13-Jan-23
27-Jan-23
10-Feb-23
24-Feb-23
10-Mar-23
24-Mar-23
07-Apr-23
21-Apr-23
05-May-23
19-May-23
02-Jun-23
16-Jun-23
30-Jun-23
14-Jul-23
28-Jul-23
11-Aug-23
25-Aug-23
08-Sep-23
22-Sep-23
06-Oct-23
20-Oct-23
Mining Index
All Share and Top 10 Indices
All Share Index (ZSE)
Top 10 Index
Mining Index

Figure 6: Market Turnover

Source: Zimbabwe Stock Exchange, 2023

Market Capitalization
The ZSE added 6.90%, or ZW$739.28 billion worth of capitalization to close at ZW$ 11 454.92
billion, during the week under analysis, from ZW$10 715.64 billion registered in the prior week.

Figure 7 shows the evolution of ZSE market capitalization for the period from 21st October 2022
to 20th October 2023.

Figure 7: Market Capitalization

Source: Zimbabwe Stock Exchange, 2023


21-Oct-22
04-Nov-22
18-Nov-22
02-Dec-22
16-Dec-22
30-Dec-22
13-Jan-23
27-Jan-23
10-Feb-23
24-Feb-23
10-Mar-23
24-Mar-23
07-Apr-23
21-Apr-23
05-May-23
19-May-23
02-Jun-23
16-Jun-23
30-Jun-23
14-Jul-23
28-Jul-23
11-Aug-23
25-Aug-23
08-Sep-23
22-Sep-23
06-Oct-23
20-Oct-23
ZW$ (Million)
Negotiated Deal: 241 million
First Mutual Holdings
Limited shares exchanged
hands at ZW$196/share


21-Oct-22
04-Nov-22
18-Nov-22
02-Dec-22
16-Dec-22
30-Dec-22
13-Jan-23
27-Jan-23
10-Feb-23
24-Feb-23
10-Mar-23
24-Mar-23
07-Apr-23
21-Apr-23
05-May-23
19-May-23
02-Jun-23
16-Jun-23
30-Jun-23
14-Jul-23
28-Jul-23
11-Aug-23
25-Aug-23
08-Sep-23
22-Sep-23
06-Oct-23
20-Oct-23
$ Billions

Victoria Falls Stock Exchange (VFEX) Developments
The decline in the VFEX mainstream index emanated from share price losses for Innscor Africa
Limited (13.35%), Bindura Nickel Corporation (BNC) (12.31%), SeedCo International VX
(10.83%), Simbisa Brands Limited (9.22%) and Zimplow Limited (0.27%).

Gains were recorded in the share prices of First Capital Bank Limited (17.50%) and African Sun
Limited the (5.25%).

VFEX Market Turnover
The cumulative volume and value of shares traded on the VFEX, rose by 29.04% and 121.74%
to 2.92 million shares and US$1.21 million, respectively.

VFEX Market Capitalization
During the week under analysis, the VFEX capitalization declined by 4.48% to US$1.17 billion,
compared to US$1.22 billion recorded in the previous week.

Figure 8 shows the trend in the VFEX All Share Index (ASI) for the period from 14th September
2022 to 20th October 2023.

Figure 8: VFEX All Share Index

Source: Victoria Falls Stock Exchange (VFEX), 2023
.
6. BEYOND INFLATION NUMBERS - THE CASE OF SKIMPFLATION

The weekly report of 13th October 2023 discussed shrinkinflation, which is a scenario where
companies reduce either the size or quantity of products, while maintaining prices. The
counterpart of shrinkinflation is referred to as skimpflation. Skimpflation is a trend where


businesses reduce the quality of product or services for the same price. In essence, some
businesses strategically reduce or “skimp” the quality of services or products to maximise profits
or to manage the profit margins on the back of rising costs. Businesses skimp by spending less
on services or materials to remain profitable.

This practice is often done secretly to escape detection by regulatory authorities, consumer
protection advocates and law enforcement agents. Skimpflation can be low in highly regulated
markets but if left undetected can have negative consequences, particularly on value for money
for the consumers and can obscure the fine details about inflation. An example of the occurrence
of skimpflation is when a baker produces bloomers - a confectionary product and sells them at
the same price of a standard loaf of bread in order to benefit from a higher profit margin. A
bloomer typically has lower weight compared to a standard loaf of bread. Similarly, hotels and
restaurants can skimp on quality by replacing more-expensive foods with cheaper foods, to cut
costs.

While consumers may notice a change in the taste of a particular food item, skimping on quality
is harder to detect in some products. A typical example includes the dilution of petroleum
products such as diesel and petrol by unscrupulous retailers and selling the product to
unsuspecting consumers at the standard regulated price, among others. The regulatory authority
in the petroleum industry in the country has, however, played a big role in conducting inspections
on petroleum retailers to maintain the quality of the petroleum products that are sold in the
country for the benefit of consumers.
Consumers should remain vigilant in detecting skimping tendencies and avoid being
shortchanged before making spending decisions. This can be achieved by paying particular
attention to the standards of products sold in the country.


RESERVE BANK OF ZIMBABWE


APPENDIX 1: FOREIGN EXCHANGE AUCTION RESULTS FOR WHOLESALE FX1


Source: Reserve Bank of Zimbabwe, 2023


1 Wholesale Foreign Currency Auction (Wholesale FX) is normally conducted on Tuesday every week. The RBZ MPC resolutions dated 6 June 2023 resolved that with effect
from 7 June 2023, the Bank shall sell foreign currency at the market-determined exchange rate through banks to support and strengthen the foreign exchange interbank market,
and banks shall in turn sell the foreign currency to their customers.


26-Sep-23
WHOLESALE FX


03-Oct-23


10-Oct-23


18-Oct-23
Total
Bids (US$ dollars)

Amount Allotted (US$
dollars)

Highest 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


26-Sep-23

03-Oct-23

10-Oct-23

18-Oct-23
Raw Materials

Machinery and Equipment

Consumables
(Incl. Spares, Tyres,
Packaging)

Pharmaceuticals and
Chemicals

Services (Loans, Dividends
and Disinvestments)

Retail and Distribution

Fuel, Electricity and Gas

Paper and Packaging

TOTAL
1,123,944.44
1,202,872.38
1,868,427.23
1,937,178.64