Vol. 25 No. 28


Week Ending
14th July 2023
Weekly Economic
Highlights
TABLE OF CONTENTS


FOREIGN CURRENCY AUCTION SYSTEM ALLOCATIONS AND


1.
OVERVIEW

This report provides an analysis of the developments in the money and capital markets for the
week ending 14 July 2023. The report also covers developments in the tobacco, mineral
commodities, and stock markets during the week. The last section of the report presents a review
of the foreign currency auction system allocations and imports.

The value of transactions processed through the National Payment System (NPS) was higher
during the week under review, largely reflecting increases in RTGS and mobile payments. The
Zimbabwe Stock Exchange (ZSE) and the Victoria Falls Stock Exchange (VEFX) were
characterized by bearish sentiments as prevailing liquidity conditions remain tight.

Demand for the local currency continues to remain strong amid continued appreciation of the
official exchange rate and falling domestic inflation. The deposit rates for the local currency
deposits remained firm, while the ZWL lending rates for loans to individuals and corporates saw
mixed developments during the week under analysis.

The volume and value of tobacco sales as at the end of the week under review were higher
compared to the corresponding period in 2022. Prices of the golden leaf prices were, however,
lower during the same period.

2.
INTEREST RATES

Local Currency (ZWL) Deposit Rates

Deposit rates were largely unchanged across different classes of deposits during the week under
review. The minimum and maximum ZWL deposit rates for savings deposits were lower while
maximum deposit rates for deposits of 1-month and 3-month tenor increased during the same
period. Commercial banks continued to offer higher rates for long term deposits in line with the
high policy interest rates.


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
(%)
23-Jun-23

30-Jun-23

7-Jul-23


14-Jul-23

Source: Reserve Bank of Zimbabwe, 2023


Local Currency Lending Rates

The minimum ZWL lending rates for corporate clients increased while those for individual
clients declined during the period of analysis. Maximum ZWL lending rates for individuals
registered a marginal increase while those for commercial clients softened during the same week.
The development on lending rates should benefit the corporate sector. The adjustments in
maximum lending rates for corporates should encourage borrowing by the firms amid the current
liquidity shortages in the market. The ZWL lending rates are shown in Table 2.


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

Individual Clients

Corporate Clients
16-Jun-23

23-Jun-23

30-Jun-23


7-July-23

14-July-23

Source: Reserve Bank of Zimbabwe, 2023

Foreign Currency (USD) Deposit Rates

During the week under review, minimum and maximum savings and deposits rates on foreign
currency deposits of all tenors remained largely unchanged during the week under review. The
average foreign currency deposits rates for all tenors 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
(%)
23-Jun-23

30-June-23

7-July-23

14-July-23

Source: Reserve Bank of Zimbabwe, 2023

Foreign Currency (USD) Lending Rates


Minimum foreign currency (FCA) lending rates for commercial banks and for individuals
decreased marginally during the period under review. The maximum lending rates for individuals
and corporates, however, increased during the same week. The reduction in FCA minimum
lending rates for individual and corporate clients, in part, reflects commercial bank measures
aimed at reducing borrowing costs for clients with favourable credit profiles.

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

Individual Clients

Corporate Clients
9-Jun-23

16-Jun-23

23-Jun-23

30-Jun-23

7-July-23

14-July-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$4.60 trillion in the previous week to ZW$5.01 trillion

during the week under analysis. The Real Time Gross Settlement RTGS transaction values were
16% higher to close at ZW$4.34 trillion during the week under review. The market was
characterised by tight conditions as government measures continue to take effect. The value of
NPS transactions during the week were 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 processed through the NPS during the week under review decreased
by 3.12% to 10.17 million. In volume terms, the NPS transactions were distributed as follows:
Mobile, 81.56%; POS, 15.79%; RTGS, 1.61%; and ATM, 1.03%, shown in Figure 2.

Figure 2: Composition of NPS Transactions in Volume Terms

Source: Reserve Bank of Zimbabwe, 2023


RTGS
86.71%
POS
4.43%
ATM
2.71%
MOBILE
6.16%
RTGS
POS
ATM
MOBILE
RTGS, 1.61%
POS, 15.79%
ATM, 1.03%
MOBILE, 81.56%
RTGS
POS
ATM
MOBILE


Table 5: National Payment Systems Activity
PAYMENT
STREAM
WEEK ENDING
07 July 2023
WEEK ENDING

14 July 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 of the 14th of July 2023, or the 88th day of the tobacco selling season, a cumulative total of
289.68 million kilograms of tobacco had been sold compared to a cumulative total of 197.27
million kilograms sold during the same period in 2022. The turnover realized from the sales
amounted to US$877.77 million compared to US$601.72 million realized during the same period
in 2022, which is 45.9% increase between the years.

Table 6: Weekly Cumulative Tobacco Sales: Day 88 (14th July 2023)

Variance (%)
Cumulative Quantity Sold (million
kgs)
197,271,518
289,682,243
46.84
Average Price (US$/kg)
3.05
3.03
-0.66
Cumulative value (US$ million)
601,715,652
877,768,825
45.88
Source: Tobacco Industry and Marketing Board (TIMB), 2023

The golden leaf was sold at an average price of US$3.03/kg, during the week under review, down
from US$3.05/kg realized during the same period in 2022.
5.
INTERNATIONAL COMMODITY PRICE DEVELOPMENTS

During the week ending 14th July 2023, weekly average international prices for all selected
commodities increased. Precious metal prices, notably gold and platinum, were largely

influenced by a weaker US dollar. Table 7 shows developments in prices for selected
commodities, during the week under review.

Table 7: Metals and Crude Oil Prices: Week ending 14th July 2023

Gold
Platinum
Palladium
Copper
Nickel
Crude Oil

US$/ounce
US$/ounce
US$/ounce
US$/tonne
US$/tonne
US$/barrel
Weekly Average
(03- 07 July)

10-July

11-July

12-July

13-July

14-July

Weekly Average
(10- 14 July)

Weekly Change (%)

Source: BBC, KITCO and Bloomberg 2023

Gold

Gold prices increased by 1.12% to US$1,943.49 per ounce during the week ending 14th July
2023, from a weekly average of US$1,921.89 per ounce in the previous week. The prices rose as
the US dollar and Treasury bond yields fell ahead of the release of the US inflation data that
could offer more signals on the Federal Reserve’s rate hike path.

Platinum
Platinum prices rose by 3.49%, from a weekly average of US$912.40 per ounce in the prior week
to US$944.20 per ounce, during the reporting week. Prices rose amid a weaker US dollar and the
indications that the Federal Reserve would end the interest rate-hiking phase. Concerns about
demand continued to constrain the extent of the gains, with China reporting significant declines
in both platinum exports and imports.

Palladium
Palladium prices rebounded by 1.43%, from a weekly average of US$1,241.00 per ounce in the
previous week to US$1,258.00 per ounce, during the week under analysis. Prices increased
owing to improved demand for the metal in China, the world’s largest consumer of metals.

Copper
Copper prices surged by 2.53%, from an average of US$8,319.60 per tonne in the preceding
week to US$8,529.80 per tonne, during the week ending 14th July 2023. The prices gained as the

US dollar tumbled, following the release of the June inflation data for the US. Investor
reservations about a significant pick-up in demand, however, weighed on sentiment.
Nickel
Nickel prices rose by 2.33%, from a weekly average of US$20,754.40 per tonne in the week
ending 7th July 2023 to US$21,238.00 per tonne, during the reporting week. Prices were
supported by a weaker US dollar and prospects of demand recovery in China.
Brent Crude Oil
During the week ending 14th July 2023, average prices of crude oil increased by 4.16% to
US$79.69 per barrel, from US$76.51 per barrel recorded in the previous week. The increase was
principally driven by tight supplies, following the decision by Saudi Arabia to cut back
production.


Exchange Rate Developments

Interbank Market
The Zimbabwe dollar (ZW$) appreciated by 7.6% on the interbank market, from an average of
ZW$5,528.17 per US$1 in the previous week to ZW$5,111.28 per US$1, during the week under
review. The local unit has continued to appreciate against major foreign currencies, and this has
been occasioned by the decline foreign currency premiums. Table 8. Shows selected foreign
currency exchange rates.

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

USD
ZAR
GBP
BWP
EURO
Weekly Average (3- 7 July)

10-July

11-July

12-Juy

13-July

14-July

Weekly Average (10 -14 July)

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

Source: Reserve Bank of Zimbabwe, 2023


6. EQUITY MARKETS


During the week ending 14th July 2023, both the Zimbabwe Stock Exchange (ZSE) and the
Victoria Stock Exchange (VEFX) were characterized by some bearish sentiments. As such, the
ZSE and VFEX All Share indices ost 15.12% and 1.36% to close the week at 131 829.50 points
and 73.41 points, respectively

Zimbabwe Stock Exchange (ZSE) Developments

The Top 10, Top 15, Medium and Small Cap indices decreased by 19.83%, 17.19%, 4.21% and
0.26% to 63 158.87 points, 86 179.88 points, 454 409.68 points and 2 160 142.99 points,
respectively. This compares to 78 782.22 points, 104 068.57 points, 474 390.67 points and 2 165
867.69 points recorded in the prior week, respectively.

The resource index, however, added 0.29% to close the week at 87 315.32 points compared to
87 058.77 points recorded in the previous week.

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

The decline in the mainstream index emanated from losses in share prices of Dairiboard Holdings
Limited (35.56%), Delta Corporation Limited (27.63%), Zimbabwe Newspaper (1980) Limited


15-Jul-22
29-Jul-22
12-Aug-22
26-Aug-22
09-Sep-22
23-Sep-22
07-Oct-22
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
Mining Index
All Share and Top 10 Indices
All Share Index (ZSE)
Top 10 Index
Mining Index

(22.53%), NMBZ Holdings Limited (22.15%) and Econet Wireless Zimbabwe Limited
(22.00%).

Partially offsetting the abovementioned losses were share price increases in Masimba Holdings
Limited (22.23%), Getbucks Microfinance Bank Limited (15.00%), CAFCA Limited (14.99%),
Nampak Zimbabwe Limited (12.70%) and General Beltings Holdings Limited (10%). The
increase in the resource index emanated from a 0.29% gain in RioZim Limited counter, during
the week under analysis.

Market Turnover
During the week under analysis, cumulative value of shares traded added 9.89% to ZW$8 846.24
billion while cumulative volumes of shares traded amounted to 24.14 million shares, representing
a decline of 75.10% compared to 96.95 million shares traded in the prior week. Figure 4 shows
the trend in daily market turnover for the period 15th July 2022 to 14th July 2023.

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

Market Capitalisation
Reflecting the negative trading sentiments exhibited on the ZSE during the week under review,
the market lost 15.74%, or ZW$1 987.44 billion worth of capitalization to close at ZW$10 638.80
billion, compared to ZW$12 626.24 billion registered in the previous week.


15-Jul-22
29-Jul-22
12-Aug-22
26-Aug-22
09-Sep-22
23-Sep-22
07-Oct-22
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
ZW$ (Million)
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.
Negotiated deal: 61.16 million
Lafarge Cement Zimbabwe
Limited shares exchanged
hands at ZW$312.65/share


Figure 5: Market Capitalization

Source: Zimbabwe Stock Exchange, 2023


Victoria Falls Stock Exchange (VFEX) Developments
The decline in the VFEX mainstream index was a result of share price declines in African Sun
Limited (20.08%), Bindura Nickel Corporation (BNC) (19.53%), Axia Corporation Limited
(16.17%), Simbisa Brands Limited (0.55%) and Innscor African Limited (0.02%). Partially
offsetting the abovementioned losses was an increase in the share price of Padenga Holdings
Limited (7.72%) counter

VFEX Market Turnover
The VFEX cumulative volume of shares traded declined by 4.54% to 3.93 million shares
compared to 4.12 million shares recorded in the previous week. In the same vein, the VFEX
cumulative value of shares traded lost 1.03% to US$0.98 million compared to US$0.99 million
recorded in the previous week.

VFEX Market Capitalization
Reflecting the negative trading on the VFEX during the week under analysis, the market lost
1.33% worth of capitalization to close at US$1.24 billion, compared to US$1.26 billion


15-Jul-22
29-Jul-22
12-Aug-22
26-Aug-22
09-Sep-22
23-Sep-22
07-Oct-22
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
$ Billions

registered in the prior week. Figure 6 shows the trend in the VFEX All Share Index (ASI) for the
period 15th July 2022 to 14th July 2023.

Figure 6: VFEX All Share Index

Source: Victoria Falls Stock Exchange (VFEX), 2023


7. FOREIGN CURRENCY AUCTION SYSTEM ALLOTMENTS AND IMPORTS

The foreign currency auction introduced in June 2020 has been a key market for establishing the
exchange rate for the domestic currency as well as for ensuring that the scarce foreign currency
is utilized for the country’s productive sectors. The system has, therefore, been an important
market-based foreign currency redistribution mechanism for the country’s imports. The system
has managed to foster in some stability both on the exchange rate and prices, reducing the parallel
exchange rate premium from over 100% at introduction, to less than 20% by the end of 2020.
Inflation remained low since the introduction of the auction until the emergence of the
speculative turbulences in the second quarter of 2022.
Since its establishment in June 2020, the auction has allocated US$4.09 billion, with the largest
allocation going towards imports of the productive sectors, including capital goods and raw
materials. Figure 7, which shows the distribution of the total foreign currency allotments on the
foreign currency auction between 2020 and July 2023, indicates that raw material imports
received the largest allotment of at least 47% of the total foreign currency allotment in the

auction, including packaging materials, followed by allotments towards machinery and
equipment, accounting for at least 21% of the total market allotments.
Table 7: Average Annual Foreign Exchange Allotments by Import Categories (%)

Source: Reserve Bank of Zimbabwe 2023
The allotments towards consumables have remained low at less than 20% compared to allotments
for the productive sectors, which shows the deliberate efforts by the Bank and Government to
ensure that the auction funds benefit the productive sectors most. The demand and redistribution
effect of foreign currency allotments on the forex auction have been strongly mirrored in the
pattern and composition of actual imports.
Figure 8: Imports of Goods by Category in US$ billion
\Source: Reserve Bank of Zimbabwe

Raw Materials
Machinery and Equipment
Retail and Distribution (Incl. Food, Beverages, etc)
Consumables (Incl. Spares, Tyres, Electricals)
Pharmaceuticals and Chemicals
Services (Loans, Dividends and Disinvestments)
Paper and Packaging
Fuel, Electricity and Gas

0.5

1.5

Raw Materials
Chemicals
Manufactured Goods
Transport & Special Motor Cars
Oils and Fats
Other Imports
Other fuels
Beverages and Tobacco
Billions

Total imports grew from US$5.4 billion in 2017 to US$8.6 billion in 2022, representing an
increase of 58.46% over the period. The top three categories of imports in 2022 were raw
materials, machinery, and chemicals, which together accounted for 54.4% of total imports,
consistent with forex allotments on the auction. In addition, there has been a significant increase
in the value of imports, particularly raw materials, and machinery imports, which is directly
related to foreign exchange allotments on the auction system over the years 2020 to 2023.
The relatively subdued proportion of manufactured goods imports over the years is consistent
with the import-substitution industrialisation strategy being pursued by Government and
industry. The sustenance of the industrialization strategy is critical for alleviating pressure on the
demand for foreign currency and promoting local industrialization with more local content, value
chain participation and domestic income.

The further liberalization of the foreign currency market is important as a market-based system
to determine and establish an appropriate and stable exchange rate for the economy and further
sustenance of price stability. The system together with other supporting fiscal and monetary
policy measures are expected to foster in greater efficiency in the redistribution of foreign
currency and discovery of the right exchange rate for the country.

RESERVE BANK OF ZIMBABWE

APPENDIX 1: FOREIGN EXCHANGE AUCTION RESULTS FOR MAINFX1 AND WHOLESALEFX 2
Source: Reserve Bank of Zimbabwe, 2023

1 Main Foreign Currency Auction. The Auction is normally conducted every Tuesday every week.
2 Wholesale Foreign Currency Auction (Wholesale FX). 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.


MAINFX
9-June-23 13-June-23 20-June-23 27-June-23
WHOLESALEFX
06-July-23 11-July-23 14-July-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
20-June-23 27-June-23 04-July-23 11-July-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
1,135,542.46
797,323.53
580,921.57
460,130.60