Vol. 25 No. 35


Week Ending
1st September 2023
Weekly Economic
Highlights
TABLE OF CONTENTS


FOREIGN AND LOCAL CURRENCY BANK DEPOSIT INTEREST

1.
OVERVIEW

This report provides an analysis of the developments in the money and capital markets for the
week ending 1st September 2023. The report also covers developments in the tobacco sales,
mineral commodities, and stock markets during the week. The last section of the report presents
a review of the structure of foreign and domestic deposit interest rates.


The Zimbabwe Stock Exchange (ZSE) registered gains during the week under analysis, while
the Victoria Falls Stock Exchange (VEFX) exhibited bearish sentiments during the same week.
The value of transactions processed through the National Payment System (NPS) were higher
during the week under review compared to the previous week, largely reflecting an increase in
ATM transactions.

The deposit rates for both the domestic currency deposits and foreign currency deposits remained
largely unchanged during the week under review.


The volume and value of tobacco sales increased during the week under review. The golden leaf
was sold at a lower price during the same week of analysis.

2.
INTEREST RATES

Local Currency (ZWL) Deposit Rates

During the week ending 1st September 2023, minimum and maximum deposit rates for all classes
of deposits were unchanged, while maximum savings deposit rates registered an increase on the
back of tight local currency liquidity conditions in the economy.

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
(%)
11-Aug-23

18-Aug-23

25-Aug-23


01-Sep-23

Source: Reserve Bank of Zimbabwe, 2023

Local Currency Lending Rates

The minimum and maximum ZWL lending rates for individual clients registered a decrease
during the week under analysis. Minimum lending rates for corporates were lower while
maximum lending rates for corporates registered a marginal increase during the same week. The
ZWL lending rates are shown in Table 2.

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

Individual Clients

Corporate Clients
11-Aug-23

18-Aug-23

25-Aug-23

01-Sep-23

Source: Reserve Bank of Zimbabwe, 2023

Foreign Currency (USD) Deposit Rates

During the week under review, minimum and maximum FCA deposit rates for all classes of
deposits remained largely unchanged. Banks continue to actively take measures to attract long
term foreign currency deposits amid firm demand for foreign currency loans by individual and
corporate clients. 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
(%)
11-Aug-23

18-Aug-23

25-Aug-23

01-Sep-23

Source: Reserve Bank of Zimbabwe, 2023

Foreign Currency (USD) Lending Rates


Minimum foreign currency lending rates (FCA) for both individuals and corporates fell by 0.06
and 0.91 percentage points, respectively. Maximum lending rates for both individual and
corporate clients were higher during the week under review. The increase in FCA lending rates
may increase borrowing costs for the productive sectors.
Table 4: Lending Rates (per annum)
Date
Minimum (%)
Maximum (%)
Minimum (%)
Maximum (%)

Individual Clients
Corporate Clients

11-Aug-23

18-Aug-23

25-Aug-23

01-Sep-23

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

During the week under analysis, aggregate transactions processed in value terms through the
National Payment System platforms was ZW$5.2 trillion, representing an increase of 12.37%
from ZW$4.7 trillion in the previous week. The Real Time Gross Settlement (RTGS) system
constituted 85.26% of the total value of transactions processed through the NPS. In value terms,
NPS transactions were distributed as shown in Figure1.

Figure 1: Composition of NPS Transactions in Value Terms

Source: Reserve Bank of Zimbabwe, 2023


RTGS
85.26%
POS
4.94%
ATM
5.19%
MOBILE
4.61%
RTGS
POS
ATM
MOBILE

The volume of transactions processed through the NPS increased by 2.07% to close at 10.33
million driven by increases in Mobile, RTGS and ATM transactions volumes. NPS transaction
volumes were distributed as follows: Mobile, 76.95%; POS, 18.26%; ATM, 2.00%; and RTGS,
2.79%, 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
25 August 2023
WEEK ENDING
01 September 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 the 117th day of the tobacco selling season, a cumulative total of 296.06 million kilograms
of tobacco had been sold, compared to a cumulative total of 207.62 million kilograms sold during
the same period in 2022. The turnover realized from the sales amounted to US$896.70 million,
a 41.17% increase, compared to US$635.19 million realized during the same period in 2022.
RTGS, 2.79%
POS, 18.26%
ATM, 2.00%
MOBILE, 76.95%
RTGS
POS
ATM
MOBILE

Table 6: Weekly Cumulative Tobacco Sales: Day 117th (1st September 2023)

Variance (%)
Cumulative Quantity Sold (million
kgs)
207,624,669
296,057,664
42.59
Average Price (US$/kg)
3.06
3.03
-1.00
Cumulative value (US$ million)
635,192,647
896,698,361
41.17
Source: Tobacco Industry and Marketing Board (TIMB), 2023

The golden leaf continued to be sold at a lower average price of US$3.03/kg, during the week
under review, down from US$3.06/kg realized during the same period in 2022.

5.
INTERNATIONAL COMMODITY PRICE DEVELOPMENTS


During the week ending 1st September 2023, international commodity prices for gold, platinum,
copper, nickel, and crude oil rose, whilst palladium price retreated. 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 1st September 2023

Gold
Platinum
Palladium
Copper
Nickel
Crude Oil

US$/ounce
US$/ounce
US$/ounce
US$/tonne
US$/tonne
US$/barrel
Weekly Average
(21 - 25 Aug)

29-Aug

30-Aug

31-Aug

1-Sep

Weekly Average
(29 Aug-1 Sep)

Weekly Change (%)

Source: BBC, KITCO and Bloomberg 2023

Gold

Gold prices continued on a positive trajectory, rising by 1.67%, from US$1,906.92 per ounce
reported in the previous week to US$1,938.84 per ounce during the week under review. This was
on the back of weak U.S. economic data released during the week ending 1st September 2023,
which reinforced expectations that the Federal Reserve is considering easing the interest rate
hikes.

Platinum
Platinum prices rose by 5.53% from a weekly average of US$927.60 per ounce in the prior week
to US$978.88 per ounce during the week under review. This increase was largely due to
prospects of improved investment demand and picking industrial demand in China.

Palladium
The week ending 1st September 2023 saw palladium prices slipping by 1.94% to US$1,256.50
per ounce, from US$1,245.20 per ounce reported in the previous week. The decline in activity
in the automotive industry hampered the demand for the precious metal.

Copper
Copper prices increased by 1.29% to US$8,477.33 per tonne during the reporting week, from
US$8,369.60 per tonne recorded in the previous week. Prices rose amid positive market
sentiments spurred by measures to stimulate China's economic growth.

Nickel
Nickel prices increased by 0.27% to close at US$20,695.75 per tonne during the week under
analysis, from US$20,640.00 per tonne reported in the previous week. Prices increased as
demand improved in China, the world's largest metal consumer.

Brent Crude Oil
During the week ending 1st September 2023, crude oil prices increased by 3.15% to US$86.51
per barrel, from US$83.87 per barrel reported in the previous week. The supply-tightening
behaviour of OPEC+ countries largely drove the increase in oil prices.

Exchange Rate Developments
Interbank Market
The Zimbabwe dollar (ZW$) depreciated by 0.5% on the interbank market, from an average of
ZW$4,568.93 per US$1 in the prior week to ZW$4,593.69 per US$1 during the reporting week,
as shown in Table 8.

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

USD
ZAR
GBP
BWP
EURO
Weekly Average (21- 25 August)

28-Aug

29-Aug

30-Aug

31-Aug

1-Sept

Weekly Average (28 Aug – 1 Sep)

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

Source: Reserve Bank of Zimbabwe, 2023


6. EQUITY MARKETS

During the week ending 1st September 2023, the Zimbabwe Stock Exchange (ZSE) traded
positively for the third consecutive week, while bearish sentiments persisted on the Victoria Falls
Stock Exchange (VFEX). As a result, the ZSE All Share index gained 1.04% while the VFEX
All Share index declined by 0.40% to close at 122 199.15 points and 70.53 points, respectively.

Zimbabwe Stock Exchange (ZSE) Developments

The Medium and Small cap indices added 5.69% and 1.16% to close at 450 491.88 points and 2
320 368.91 points, compared to previous week’s positions of 426 248.25 points and 2 293 785.91
points, respectively. Concomitantly, the resource index gained 14.97% to 109 159.36 points
compared to 94 942.74 points, recorded in the previous week.

Figure 3 shows developments on the ZSE’s All Share, Top 10 and Mining indices from 2nd
September 2022 to 1st September 2023.

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


The rise in the mainstream index emanated from share price gains in First Mutual Holdings
Limited (30.96%), British American Tobacco (BAT) Limited (27.82%), Dairibord Holdings
Limited (18.87%), Zimre Holdings Limited (15.08%) and Nampack Zimbabwe Limited
(12.24%).

Partially offsetting the aforementioned gains were declines in the share prices of Willdale
Limited (81.16%), CBZ Holdings Limited (21.39%), Getbucks Microfinance Bank Limited
(11.63%), OK Zimbabwe Limited (7.16%) and Tanganda Tea Company Limited (5.58%).

The growth in the resource index was a result of a 14.98% increase in share price of RioZim
Limited during the week under review.

Market Turnover
During the week under analysis, trading activity was concentrated on some selected blue-chip
counters, albeit on low volumes. As such, the cumulative value of shares traded increased by
96.53% to ZW$13 359.98 million despite a decline of 37.59% in volume of shares traded,
amounting to 22.38 million shares.


02-Sep-22
16-Sep-22
30-Sep-22
14-Oct-22
28-Oct-22
11-Nov-22
25-Nov-22
09-Dec-22
23-Dec-22
06-Jan-23
20-Jan-23
03-Feb-23
17-Feb-23
03-Mar-23
17-Mar-23
31-Mar-23
14-Apr-23
28-Apr-23
12-May-23
26-May-23
09-Jun-23
23-Jun-23
07-Jul-23
21-Jul-23
04-Aug-23
18-Aug-23
01-Sep-23
Mining Index
All Share and Top 10 Indices
All Share Index (ZSE)
Top 10 Index
Mining Index

Figure 4 shows the trend in daily market turnover for the period 2nd September 2022 to 1st
September 2023.

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

Market Capitalization
As a consequence of improved trading activity on the ZSE during the week under review, the
market added 1.04%, or ZW$99.63 billion worth of capitalization to close at ZW$9 718.39
billion, compared to ZW$9 618.77 billion registered in the previous week. Figure 5 shows the
evolution of market capitalization for the period 2nd September 2022 to 1st September 2023.


02-Sep-22
16-Sep-22
30-Sep-22
14-Oct-22
28-Oct-22
11-Nov-22
25-Nov-22
09-Dec-22
23-Dec-22
06-Jan-23
20-Jan-23
03-Feb-23
17-Feb-23
03-Mar-23
17-Mar-23
31-Mar-23
14-Apr-23
28-Apr-23
12-May-23
26-May-23
09-Jun-23
23-Jun-23
07-Jul-23
21-Jul-23
04-Aug-23
18-Aug-23
01-Sep-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 decrease in Africa Sun
Limited (15.38%), SeedCo International Limited (10.62%), First Capital Bank Limited (4.31%),
Zimplow Holdings Limited (1.03%) and Padenga Holdings Limited (0.56%).

Partially offsetting the abovementioned declines were increases in the share prices of Axia
Corporation Limited (33.21%) and Innscor Africa Limited (1.11%).

VFEX Market Turnover
The VFEX cumulative volume and value of shares traded increased by 496.25% and 304.33%
to 4.47 million shares and US$0.70 million, compared to 0.75 million shares and US$0.17
million, recorded in the previous week, respectively.

VFEX Market Capitalization
Reflecting subdued trading activity on the VFEX during the week under analysis, the market lost
0.39% worth of capitalization to close at US$1.21 billion.

Figure 6 shows the trend in the VFEX All Share Index (ASI) for the period 2nd September 2022
to 1st September 2023.


02-Sep-22
16-Sep-22
30-Sep-22
14-Oct-22
28-Oct-22
11-Nov-22
25-Nov-22
09-Dec-22
23-Dec-22
06-Jan-23
20-Jan-23
03-Feb-23
17-Feb-23
03-Mar-23
17-Mar-23
31-Mar-23
14-Apr-23
28-Apr-23
12-May-23
26-May-23
09-Jun-23
23-Jun-23
07-Jul-23
21-Jul-23
04-Aug-23
18-Aug-23
01-Sep-23
$ Billions

Figure 6: VFEX All Share Index

Source: Victoria Falls Stock Exchange (VFEX), 2023

7. STRUCTURE OF FOREIGN AND DOMESTIC DEPOSIT INTEREST RATES

The structure of deposit interest rates on domestic and foreign currency accounts in relation to
the tenor of the account influences whether savings are short term or long term, and hence the
capacity of the banks to finance business investment and working capital requirement necessary
for generating sustainable growth for the economy. Over the years and from time to time, the
Reserve Bank of Zimbabwe (the Bank) has attempted to influence both the level and structure
of the deposit interest rates above those prescribed by policy through moral suasion by engaging
the banks. The minimum policy prescribed deposit interest rates have taken into consideration
inflation developments to protect the real value of deposits. Moral suasion between the Bank and
banking institutions has seen banks offering higher interest rates on deposits than the minimum
deposit rates.

While domestic currency deposits are critical for purposes of financing credit requirements for
domestic expenditure on investment and consumption, the foreign currency deposit mobilisation
by the banks is important in bridging the country’s foreign resource gap and import requirements
in respect of raw materials, capital goods, chemicals and pharmaceuticals and finished products
for direct consumptions, which are largely unavailable locally. The mobilization of foreign

savings through the formal channels, therefore, adds to the supply of foreign currency in the
domestic forex market and assist in stabilizing the exchange rate and prices. The banks currently
hold about 75% of their deposits as FCAs while 25% is accounted for by local currency deposits.
Total banking sector deposits, including FCAs amounted to ZW$10.3 trillion as of 31 July 2023.

The minimum deposit rates on FCA accounts are 1% and 2.5% for savings and fixed tenor
deposits, respectively. On average, the maximum deposit rates offered by banks on long term
deposits is currently at 5% which is significantly higher than the minimum bank deposit policy
rate of 2.5%. The minimum policy prescribed FCA deposit rates compare with 30% and 50%
on the domestic currency savings and time deposits, respectively. Figures 7 shows that
commercial banks in the country are able to mobilise foreign currency time deposits at rates that
are lower and more competitive than the cost of funds rates for banks in advanced economies,
which basing on the federal fund rate average between 4.5% and 5.5%. This gives significant
potential for the country to optimise the benefits of foreign resource mobilisation from the
domestic markets for on lending to the productive sectors.

Figure 7: Minimum FCA deposit rates


An important feature on the deposit interest rate structure on foreign currency deposits shown in
figure 7 relates to the term structure of the deposit rates with higher rates being offered on longer
term deposits than on short term deposits. The average 12-month deposit rates were, for example

Feb-23
Mar-23
Apr-23
May-23
Jun-23
Jul-23
Aug-23
Sep-23
Percentage (%)
Minimum 1- Month deposit rate
Minimum 3- Month deposit rate
Minimum 6-Month deposit rate
Minimum 12- Month deposit rate
Baseline US Dollar Cost of Funds (Federal Funds Rate)
Minimum Policy Prescribed Rate

0.5 percentage points higher than the 1-month deposit rates in September 2023. This should allow
banks to mobilize longer term FCA deposits critical for financing long term credit provision. The
structure is consistent with high demand for long term credit in foreign currency.

On the contrary, the structure of deposit interest rates on the local currency deposits is reversed,
with banks paying higher deposit rates on shorter term deposits than on long term deposits, which
is reflective of short termism among the banks and economic agents. The situation, which shows
lack of appetite for long term domestic currency deposits is both a reflection of adverse inflation
expectations that signal the presence of speculative arbitraging between the domestic and foreign
currencies, a source of potential forex market turbulences and accelerated currency switch.

Figure 8: Minimum ZWL deposit rates


Coupled with the downward trend in the average deposit rates across all deposit tenors on the
domestic currency deposits, the structure of the deposit interest rates portrayed in figure 8 points
to high risks of long-term domestic currency credit constraints, which may starve the productive
sectors of critical domestic financing requirements. The reversal of the current structure on the
deposit currency interest rates requires banks and economic agents to align expectations about
future inflation with the current negative trends on monthly inflation.
RESERVE BANK OF ZIMBABWE

Feb-23
Mar-23
Apr-23
May-23
Jun-23
Jul-23
Aug-23
Percent (%)
Maximum 1-month deposit rate
Maximum 3-month deposit rate
Maximum 6-month deposit rate
Maximum 12-month deposit rate
Minimum Policy Prescribed Rate


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.


WHOLESALEFX
03-August-23 08- Aug-23 16-Aug-23 29-Aug-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
01-August-23 08-Aug-23 16-Aug-23
29-Aug-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
497,893.08
884,829.72
569,439.28
545,877.82