Vol. 25 No. 47


Week Ending
24th November 2023
Weekly Economic
Highlights
TABLE OF CONTENTS


THE ROLE OF INFLATION EXPECTATIONS ON INFLATION

1. OVERVIEW


This report provides an analysis of the money market interest rates, transactions under the
National Payment Systems, movements in international prices of selected mineral commodities
as well as stock market price and volume developments. The report also carries out an analysis
of the importance of expectations in influencing and shaping domestic inflation. The report
covers the week ending 24th November 2023.

The minimum savings deposit rates for local currency deposits were lower during the week under
review while foreign currency deposit interest rates remained largely unchanged, during the same
period. A total value of ZW$6.39 trillion was processed through the National Payment Systems
(NPS) during the week, reflecting a 10.12% decline from the previous week’s levels as aggregate
demand remains depressed ahead of the month end.

The international prices of gold, platinum, palladium, crude oil and copper increased during the
week amid speculation that the Federal Reserve is nearing the end of its interest rate hiking cycle.
The prices of nickel and lithium, however, registered declines due to waning demand for nickel
coupled with loss-making conditions from the stainless-steel sector. The decline in lithium prices
signal concerns regarding diminished demand prospects for the commodity after China presented
mixed economic data.

The Zimbabwe Stock Exchange (ZSE) was characterised by mixed trading while the Victoria
Falls Stock Exchange (VFEX) was bullish during the week under analysis.

2. INTEREST RATES

Local Currency (ZW$) Deposit Rates

Commercial bank minimum deposit rates for savings deposits registered a decline while those
for 1 month, 3-month and 6-month tenor were higher during the week of analysis. Maximum
deposit rates for deposits of 1 month, 3-month, 6-month and 12-month tenor increased while
those for savings deposits remained unchanged during the same week.

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
(%)
27-Oct-23

3-Nov-23

10-Nov-23

17-Nov-23


24-Nov-23

Source: Reserve Bank of Zimbabwe, 2023

Local Currency (ZW$) Lending Rates
The minimum and maximum lending rates for individual clients decreased during the week
ending 24th November 2023. The minimum deposit rates for corporates clients were higher while
maximum lending rates decreased during the same period.

Table 2 shows local currency lending rates.

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

Individual Clients

Corporate Clients

27-Oct-23

3-Nov-23

10-Nov-23

17-Nov-23

24-Nov-23

Source: Reserve Bank of Zimbabwe, 2023

Foreign Currency (USD) Deposit Rates

During the week under review, minimum and maximum foreign currency deposit rates for
deposits of all classes remained unchanged. Average foreign currency deposit 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
(%)
27-Oct-23

3-Nov-23

10-Nov-23

17-Nov-23

24-Nov-23

Source: Reserve Bank of Zimbabwe, 2023

Foreign Currency (USD) Lending Rates
During the week ending 24th November 2023, minimum and maximum foreign currency lending
rates for individual clients increased by 0.4 and 0.3 percentage points, respectively. Minimum
foreign currency lending rates for corporate clients declined while maximum lending rates for
corporate clients increased. Table 4 shows foreign currency lending rates.

Table 4: Lending Rates (per annum)

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

Individual Clients
Corporate Clients

20-Oct-23

27-Oct-23

3-Nov-23

10-Nov-23

17-Nov-23

24-Nov-23

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

The aggregate transactions processed in value terms through the National Payment Systems
platforms was ZW$6.39 trillion, representing a decrease of 10.12% from the previous week’s
levels, reflecting depressed settlement activity ahead of the month end.

The distribution of NPS transactions, in value terms, was as follows: Real Time Gross
Settlement (RTGS), 82.83%; Point of Sale (POS), 6.45%; Automated Teller Machines (ATM),
5.72% and Mobile, 5.00%, 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 increased by 4.64% to close at 13.57
million, largely on account of increases in ATM and RTGS volumes. Mobile based transactions
continued to dominate NPS transactions volumes at 80.26% of the total, followed by POS,
16.47%; RTGS, 1.79%; and ATM, 1.47% as shown in Figure 2.

Figure 2: Composition of NPS Transactions in Volume Terms

Source: Reserve Bank of Zimbabwe, 2023
RTGS
82.83%
POS
6.45%
ATM
5.72%
MOBILE
5.00%
RTGS
POS
ATM
MOBILE
RTGS, 1.79%
POS, 16.47%
ATM, 1.47%
MOBILE, 80.26%
RTGS
POS
ATM
MOBILE

Table 5: National Payment Systems Activity
PAYMENT
STREAM
WEEK
ENDING
17 NOVEMBER

WEEK
ENDING
24 NOVEMBER

% 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. INTERNATIONAL COMMODITY PRICE DEVELOPMENTS

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

Table 6: Metal and Crude Oil Prices for the week ending 24th November 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
(13 - 17
November)

20-Nov

21-Nov

22-Nov

23-Nov

24-Nov

Weekly Average
(20 - 24 Nov)

Weekly Change

Source: BBC, KITCO and Bloomberg 2023

Precious Metals
During the week under review, the average weekly prices of precious metals, namely gold,
platinum and palladium, gained 1.51%, 4.06% and 7.58%, respectively. Lithium prices
decelerated by 4.63% in the same week, as indicated in Table 6. Global gold and platinum prices

increased, ending the week supported by a weaker US dollar amid speculation that the Federal
Reserve is nearing the end of its interest rate hiking cycle. At the same time, attention switched
to US inflation data due later this week.

The increase in palladium prices was on account of higher demand and a weaker US dollar.
Lithium prices, however, declined, signalling concerns regarding diminished demand prospects
after China presented mixed economic data. Global electric car sales, however, are expected to
surge 35% this year to 14 million units, according to the International Energy Agency's annual
outlook released in April 2023, which is anticipated to weigh down prices.

The price trends for Gold, Platinum, Palladium and Lithium Hydroxide for the period 20
November 2023 to 24 November 2023, are shown in Figure 3.

Figure 3: Weekly Precious Metals Price Developments (20 - 24 November. 2023)

Source: Kitco,2023

Source: Kitco,2023

Source: Kitco,2023

Source: London Metal Exchange,2023

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)

Base Metals and Brent Crude Oil
Crude oil prices increased by 0.47%, attributed to market demand caused by oil cuts meant to
rejuvenate the market, particularly from OPEC countries. Copper price increased by 2.12%,
supported by a weaker dollar and improved risk appetite in financial markets. In addition.
Bloomberg reported on Thursday that China may allow banks to offer unsecured short-term loans
to qualified developers for the first time to ease the sector crisis after finalising a draft of 50
developers eligible for financial support, boosting market demand.

Nickel prices contracted by 4.04% due to waning demand coupled with loss-making conditions
from the stainless-steel sector, the primary consumer of nickel, which has led to wider production
cuts and weighed down prices. In addition, nickel consumption from electric vehicles came in
softer than expected.

Figure 4: Daily commodity price developments for copper, nickel, and Brent crude oil
(19 Nov. 2023 - 24 Nov. 2023)

Source: London Metal Exchange,2023

Source: London Metal Exchange,2023

19-Nov
20-Nov
21-Nov
22-Nov
23-Nov
24-Nov
US$/tonne
17-Nov
20-Nov
21-Nov
22-Nov
23-Nov
24-Nov
Copper

Copper
Linear (Copper)

19-Nov
20-Nov
21-Nov
22-Nov
23-Nov
24-Nov
US$/tonne
17-Nov
20-Nov
21-Nov
22-Nov
23-Nov
24-Nov
Nickel

Nickel
Linear (Nickel)

Source: BBC,2023

Exchange Rate Developments

Interbank Market
During the period under analysis, the Zimbabwe dollar (ZW$) experienced a marginal
depreciation of 0.33% against the US dollar on the interbank market. The average exchange rate
shifted from ZW$5,750.48 per US$1 in the previous week to ZW$5,769.65 per US$1. In addition
to that, there was an appreciation of the ZW$ against the South African Rand (ZAR), indicating
a marginal gain. However, the ZW$ depreciated against the British Pound (GBP), Botswana Pula
(BWP) and the Euro (EURO) by 1.6%, 0.3% and 1.5%, respectively, during the week.


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

USD
ZAR
GBP
BWP
EURO
Weekly Average
(06 - 10 November)

20-Nov

21-Nov

22-Nov

23-Nov

24-Nov

Weekly Average
(20 -24 Nov)

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

Source: Reserve Bank of Zimbabwe, 2023


19-Nov
20-Nov
21-Nov
22-Nov
23-Nov
24-Nov
US$/barrel
17-Nov
20-Nov
21-Nov
22-Nov
23-Nov
24-Nov
Brent crude oil

Brent crude oil
Linear (Brent crude oil)

5. EQUITY MARKETS

During the week ending 24th November 2023, the Zimbabwe Stock Exchange (ZSE) exhibited
mixed sentiments as investors prepare to wind up the year. On the other hand, the Victoria Falls
Stock Exchange (VFEX) traded in the positive trajectory. The ZSE and VFEX All Share indices
added 2.19% and 1.29% to close at 177 395.02 points and 68.78 points, respectively. Tables 7
and 8 shows ZSE and VFEX statistics.

Table 7: Zimbabwe Stock Exchange Statistics1

All Share
Index
Points
Top 10
index
(points)


Mining
Index
(points)
Grand
Market
Capitaliz
ation
(ZWL
billion)
Market
Turnover
(ZWL
million)
Volume
of Shares
(million)
Top 15
Index
points
Medium
Cap
(points)
Small Cap
(points)


03-Nov-23

10-Nov-23

17-Nov-23

24-Nov-23

% Change

2.19
-1.02

-0.51
8.82

-0.57
2.30

1.10
-69.78
-69.8
Source, Zimbabwe Stock Exchange, 2023

Table 8: Victoria Falls Stock Exchange Statistics
Date
All Share Index Points
Grand Market
Capitalization (US$
billion)
Market Turnover (US$
million)
Volume of Shares
(million)
03-Nov-23

10-Nov-23

17-Nov--23

24-Nov-23

% Change

Source, Zimbabwe Stock Exchange, 2023


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

Zimbabwe Stock Exchange (ZSE) Developments

The Medium Cap added 8.82% to close at 814 589.67 points, while the Top 10, Top 15 and
Small cap indices lost 1.02%, 0.51% and 0.57% to close at 76 303.61 points, 104 591.00 points
and 5 313 312.58 points, respectively.

The increase in the mainstream index resulted from share price gains in First Mutual Properties
Limited (22.35%), General Beltings Holdings Limited (20.36%), Zimre Holdings Limited
(19.23%), Ariston Holdings Limited (18.03%) and SeedCo Limited (14.56%).

Losses were registered in share prices of Nampack Zimbabwe Limited (10.58%), Delta
Corporation Limited (5.50%), CFI Holdings Limited (5.00%), Rainbow Tourism Group Limited
(3.44%) and CBZ Holdings Limited (3.44%).

The mining index added 2.30% to close at 148 883.44 points compared to 145 542.27 points
recorded in the prior week. Figure 5 shows selected ZSE indices.

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

Source: Zimbabwe Stock Exchange, 2023


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
15-Sep-23
29-Sep-23
13-Oct-23
27-Oct-23
10-Nov-23
24-Nov-23
Mining Index
All Share and Top 10 Indices
All Share Index (ZSE)
Top 10 Index
Mining Index

Market Turnover
The cumulative volume and value of shares traded declined by 69.85% and 69.78% to 20.98
million shares and ZW$6.14 billion, respectively. This compares to 69.57 million shares and
ZW$20.33 billion, recorded in the previous week.

Figure 6 shows the trend in daily market turnover for the period 25th November 2022 to 24th
November 2023.

Figure 6: Market Turnover
Source: Zimbabwe Stock Exchange, 2023

Market Capitalization
Despite the slowdown in trading activity on the ZSE during the week under review, as evidenced
by the decline in volume and value of shares traded, the market added 1.10%, or ZW$157.12
billion worth of capitalization to close at ZW$14 458.60 billion.

Figure 7 shows the evolution of market capitalization for the period 25th November 2022 to 24th
November 2023.


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
15-Sep-23
29-Sep-23
13-Oct-23
27-Oct-23
10-Nov-23
24-Nov-23
ZW$ (Million)
Negotiated Deal: 241 million
First Mutual Holdings
Limited shares exchanged
hands at ZW$196/share

Figure 7: Market Capitalization

Source: Zimbabwe Stock Exchange, 2023

Victoria Falls Stock Exchange (VFEX) Developments

The VFEX mainstream index increased by 1.28% during the week under review, due to share
price gains in SeedCo International VX (19.09%), Axia Corporation Limited (18.66%), Padenga
Holdings Limited (16.73%) and African Sun Limited (6.38%).

Losses were registered in the share prices of Bindura Nickel Corporation (BNC) (14.39%),
Simbisa Brands Limited (8.01%) and Innscor Africa Limited (14.16%).

VFEX Market Turnover

The VFEX volume and values of shares increased by 32.92% and 94.95% to 6.08 million shares
and US$0.79 million, respectively. This is in comparison to 4.58 million shares and US$0.40
million recorded in the preceding week.

VFEX Market Capitalization
The market added 1.28% worth of capitalization to close at US$1.19 billion compared to
US$1.18 billion, recorded in the prior week. This is, in part, attributed to subdued trading activity
on the VFEX.


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
15-Sep-23
29-Sep-23
13-Oct-23
27-Oct-23
10-Nov-23
24-Nov-23
$ Billions

Figure 8 shows the trend in the VFEX All Share Index (ASI) for the period 25th November
2022 to 24th November 2023.


Figure 8: VFEX All Share Index

Source: Victoria Falls Stock Exchange (VFEX), 2023
6. THE ROLE OF INFLATION EXPECTATIONS ON INFLATION OUTCOMES


The country’s experience with episodes of high inflation changed the dynamics of inflation
expectations in the economy. In essence, past memory tends to play a role in the formation of
inflation expectations particularly with regards to backward looking agents. In the case of
Zimbabwe, the proportion of backward-looking agents relying on past inflation including the
2008/09 hyperinflation to form expectations about future inflation is high. Precisely, at least 80%
of the inflation out-turn in the economy emanates from the effects of expected inflation.
The Bank continues to implement measures that complement Government efforts that are aimed
at entrenching forward looking behaviour in the formation of inflation expectations to ensure
that they rely on current inflation trends and signals from prevailing monetary policy stance to
shape future expectations. The Bank achieves this goal through policy transparency, consistency,
and timeous communication. Thus, the policy resolutions of the Monetary Policy Committee
(MPC) after every meeting on the current and direction of the monetary policy stance, interest

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
15-Sep-23
29-Sep-23
13-Oct-23
27-Oct-23
10-Nov-23
24-Nov-23

rates and inflation outlook are shared with the public to ensure that economic agents are well
informed on how to form their expectations about future inflation.
The Bank’s goal is to anchor inflation expectations particularly with a view of reducing the
proportion of households with backward looking behaviour in the formation of inflation
expectations. In addition, the Bank also aims to minimise the influence of various other factors
that impact on the formation of inflation expectations in the economy, including expectations
built around the likely effects of natural disasters and shocks such as climate change risks.

The Bank continues to communicate its actions and policies deliberately and transparently
through various channels. Specifically, the Bank avails information to the public through
publication of reports and key statistics on the official website, social and print media platforms.
In addition, some of the key information from the Bank is disseminated through delivery of
speeches and reports in private and public fora among others. The public is, therefore urged to
fact check information in to foster the use of credible information before making decisions.

RESERVE BANK OF ZIMBABWE


APPENDIX 1: FOREIGN EXCHANGE AUCTION RESULTS FOR WHOLESALEFX2

Source: Reserve Bank of Zimbabwe, 2023


2 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.


30-Oct-23
WHOLESALE FX


07-Nov-23


14-Nov-23


21-Nov-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


30-Oct-23

07-Nov-23

14-Nov-23

21-Nov-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
1,582,724.27
1,899,339.62
1,999,717.91
2,114,258.76