Vol. 25 No. 34


Week Ending
25th August 2023
Weekly Economic
Highlights
TABLE OF CONTENTS


1.
OVERVIEW

This report provides an analysis of the developments in the money and capital markets for the
week ending 25th August 2023. The report also covers developments in mineral commodity
prices, and stock markets during the week. The last section of the report presents a review of
domestic currency deposit interest rates and how they can be used to influence domestic savings.


The Zimbabwe Stock Exchange (ZSE) traded in a positive trajectory for the second consecutive
week. However, the Victoria Falls Stock Exchange (VEFX) traded in a negative trajectory,
during the same week. The value of transactions processed through the National Payment
Systems (NPS) were higher during the week under review compared to the previous week,
largely reflecting increases in RTGS, POS and ATM transactions.


The deposit rates for domestic currency deposits remained largely unchanged during the week
under analysis, as the policy-based minimum deposit rates also remained unchanged.


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. The golden leaf was sold at an average price of
US$3.03 per kg, down from US$3.06 per kg realized in the same period in 2022.

2.
INTEREST RATES

Local Currency (ZWL) Deposit Rates

During the week ending 25th August 2023, minimum and maximum deposit rates for all classes
of deposits were unchanged on the back of continued tight 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
(%)
04-Aug-23

11-Aug-23


18-Aug-23

25-Aug-23


Source: Reserve Bank of Zimbabwe, 2023

Local Currency Lending Rates

Minimum and maximum ZWL lending rates for individual and corporate clients registered
declines during the week under analysis, which was a positive development for domestic
currency borrowers. The ZWL lending rates are shown in Table 2.


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

Individual Clients

Corporate Clients
28-July-23

04-Aug-23

11-Aug-23

18-Aug-23

25-Aug-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 are actively taking measures to attract long term
foreign currency deposits, amid firm demand for foreign currency loans by individual and
corporate bank clients. The average foreign currency deposits rates for the reporting week 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
(%)
04-Aug-23

11-Aug-23

18-Aug-23

25-Aug-23

Source: Reserve Bank of Zimbabwe, 2023

Foreign Currency (USD) Lending Rates

Minimum foreign currency lending rates (FCA) for individuals fell by 0.01 percentage points,
while minimum foreign currency lending rates for corporate clients remained unchanged, during
the week under review. Maximum lending rates for individuals increased, while those for
corporate clients were lower during the same week.

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

Individual Clients

Corporate Clients
21-July-23

28-Jul-23

04-Aug-23

11-Aug-23

18-Aug-23

25-Aug-23

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

The aggregate value of transactions processed through the National Payment Systems amounted
to ZW$4.67 trillion during the week under review, representing an increase of 26.07% from
ZW$3.70 trillion recorded in the previous week. This was underpinned by increases in
transaction processed through the Real Time Gross Settlement (RTGS) system, Point of Sale,
and ATMs. The NPS transaction values were distributed as shown in Figure 1.

Figure 1: Composition of NPS Transactions in Value Terms

Source: Reserve Bank of Zimbabwe, 2023


RTGS
86.47%
POS
5.38%
ATM
3.43%
MOBILE
4.72%
RTGS
POS
ATM
MOBILE

The volume of transactions processed through the NPS increased by 3.53% to close at 10.12
million, during the reporting week. This was largely driven by increases in RTGS transactions
volumes. The NPS transaction volumes were distributed as follows: Mobile, 78.02%; POS,
18.64%; RTGS, 1.96%; and ATM, 1.39%, 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
18 August 2023
WEEK ENDING

25 August 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
During the week under review, or the 113th day of the tobacco selling season, a cumulative total
of 295.78 million kilograms of tobacco had been sold, compared to a cumulative total of 206.81
million kilograms sold during the same period in 2022. The turnover realized from the sales
amounted to US$895.94 million, a 41.51% increase, compared to US$633.13 million realized
during the same period in 2022.

RTGS, 1.96%
POS, 18.64%
ATM, 1.39%
MOBILE, 78.02%
RTGS
POS
ATM
MOBILE

Table 6: Weekly Cumulative Tobacco Sales: Day 113th (25th August 2023)

Variance (%)
Cumulative Quantity Sold (million
kgs)
206,808,700
295,784,328
43,02
Average Price (US$/kg)
3.06
3.03
-1.06
Cumulative value (US$ million)
633,130,802
895,937,257
41,51
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$3.06/kg realized during the same period in 2022.

5.
INTERNATIONAL COMMODITY PRICE DEVELOPMENTS


During the week under analysis, international commodity prices for gold, platinum, palladium,
copper, and nickel increased, while crude oil prices declined, as shown in Table 7.

Table 7: Metals and Crude Oil Prices: Week ending 25th August 2023

Gold
Platinum
Palladium
Copper
Nickel
Crude Oil

US$/ounce
US$/ounce
US$/ounce
US$/tonne
US$/tonne
US$/barrel
Weekly Average (16 - 18 Aug)

21-Aug

22-Aug

23-Aug

24-Aug

25-Aug

Weekly Average (21 - 25 Aug)

Weekly Change (%)

Source: BBC, KITCO and Bloomberg 2023

Gold

Gold prices increased by 0.30% to US$1,906.92 per ounce from US$1,901.20 per ounce reported
in the previous week. The price increase was mainly driven by supply constraints and strong
demand for the yellow metal as a safe haven asset.

Platinum
Platinum prices increased by 3.15%, from a weekly average of US$899.30 per ounce in the
previous week to US$927.60 per ounce, during the reporting week. The prices exhibited a bullish
trading pattern on account of robust demand from China, the world's largest metal consumer.

Palladium
Palladium prices rose by 0.91%, from a weekly average of US$1,245.20 per ounce in the
previous week to US$1,256.50 per ounce, during the week under review. The increase was
mainly attributable to strong demand from the electronics and automotive industries.

Copper
Copper prices increased by 1.76% to an average of US$8,369.60 per tonne, during the week
under analysis, from an average of US$8,224.74 per tonne recorded in the previous week. This
was premised on Chinese policy support and hopes of improving demand for the metal in the
coming months.
Nickel
During the week ending 25th August 2023, nickel prices rebounded by 2.82% to close at
US$20,640.00 per tonne, from US$20,074.60 per tonne reported in the prior week. Prices
increased on account of improved demand for the metal.
Brent Crude Oil
Brent crude oil prices weakened by 0.87%, from US$84.61 per barrel in the prior week to
US$83.87 per barrel during the reporting week. The decline was mainly due to weakening
demand, driven by moderating manufacturing activity in the United States and Europe.


Exchange Rate Developments

Interbank Market
During the week under review, the Zimbabwe dollar (ZW$) appreciated by 0.01% on the
interbank market, from an average of ZW$4,569.46 per US$1 in the previous week to
ZW$4,568.93 per US$1, as shown in Table 2. The appreciation, which was in line with the
exchange rate correction towards equilibrium, followed the current tight monetary policy stance
pursued by the Central Bank.

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

USD
ZAR
GBP
BWP
EURO
Weekly Average (16- 18 August)

21-Aug

22-Aug

24-Aug

25-Aug

Weekly Average (21- 25 August)

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

Source: Reserve Bank of Zimbabwe, 2023


6. EQUITY MARKETS
During the week ending 25th August 2023, the Zimbabwe Stock Exchange (ZSE) traded
positively for the second consecutive week, while bearish sentiments characterized the Victoria
Falls Stock Exchange (VFEX). As a result, the ZSE All Share index gained by 0.52% to close at
121 130.97 points. The VFEX All Share index lost 0.63% to close the week under review at
70.81 points.

Zimbabwe Stock Exchange (ZSE) Developments

The Top 10 and Top 15 indices gained 1.45% and 1.80% to close at 57 327.76 points and
78 455.59 points, compared to previous week positions of 56 507.49 points and 77 070.41 points,
respectively. The resource index remained unchanged at 94 942.74 points, during the week under
analysis.

Figure 3 shows developments on the ZSE’s All Share, Top 10 and mining indices for the period
from 26th August 2022 to 25th August 2023.

Figure 3: ZSE All Share, Top 10 and Mining Indices

Source: Zimbabwe Stock Exchange, 2023


The increase in the mainstream index was attributed to share price gains in Afdis Limited
(12.50%), Amalgamated Regional Trading (ART) Holdings Limited (10.87%), Rainbow
Tourism Group Limited (5.61%), Nampak Zimbabwe Limited (5.00%) and CBZ Holdings
Limited (3.88%).

Partially offsetting the aforementioned gains were losses in the share prices of Masimba
Holdings Limited (42.39%), First Mutual Holdings Limited (14.29%), SeedCo Limited (3.41%),
Ecocash Holdings Zimbabwe Limited (3.02%) and Star Africa Corporation Limited (2.55%).

Market Turnover
The cumulative volume and value of shares traded on the ZSE increased by 1 149.49% and
311.82% to 35.86 million shares and ZW$6 798.06 million, compared to 2.87 million shares and
ZW$1 650.75 million recorded in the prior week, respectively. The surge in market turnover was
largely informed by a negotiated deal in which 22.10 million Turnall Holding Limited shares
exchanged hands at ZW$14.00 per share during the week.

Figure 4 shows the trend in daily market turnover for the period 26th August 2022 to 25th August
2023.


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
28-Jul-23
11-Aug-23
25-Aug-23
Mining Index
All Share and Top 10 Indices
All Share Index (ZSE)
Top 10 Index
Mining Index

Figure 4: ZSE Market Turnover


Source: Zimbabwe Stock Exchange, 2023

Market Capitalization

Owing to improved trading activity on the ZSE during the week under review, the market gained
0.52%, or ZW$50.15 billion worth of capitalization to close at ZW$9 618.77 billion, compared
to ZW$9 568.62 billion recorded in the previous week.

Figure 5 shows the evolution of market capitalization for the period from 26th August 2022 to
25th August 2023.

Figure 5: Market Capitalization

Source: Zimbabwe Stock Exchange, 2023


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
Negotiated deal: 61.16
million Lafarge Cement
Zimbabwe Limited


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
28-Jul-23
11-Aug-23
25-Aug-23
Billions ZWL

Victoria Falls Stock Exchange (VFEX) Developments
The decline in the VFEX mainstream index was a result of share price decreases in Africa Sun
Limited (17.89%), Zimplow Holdings Limited (2.26%), First Capital Bank Limited (1.42%) and
Padenga Holdings Limited (0.56%). Partially offsetting the abovementioned declines were
increases in the share prices of Innscor Africa Limited (1.00%) and Simbisa Brands Limited
(0.73%).

VFEX Market Turnover
The cumulative volume and value of shares traded on the VEFX increased by 16.70% and
45.25% to 0.75 million shares and US$0.17 million, respectively. This compares to 0.64 million
shares and US$0.12 million, recorded in the previous week, respectively.

VFEX Market Capitalization
Reflecting the negative momentum on the VFEX during the week under analysis, the market lost
0.62% worth of capitalization to close at US$1.21 billion, compared to US$1.22 billion recorded
in the previous week.

Figure 6 shows the trend in the VFEX All Share Index (ASI) for the period from 26th August
2022 to 25th August 2023

Figure 6: VFEX All Share Index

Source: Victoria Falls Stock Exchange (VFEX), 2023

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
28-Jul-23
11-Aug-23
25-Aug-23

7. BANK DEPOSIT INTEREST RATES AND SAVINGS

The net interest margin, defined as the margin between the lending and deposit rates of a bank is
a key indicator of financial sector competition and scope of financial intermediation by the banks,
with a high margin usually associated with limited sector competition, while a low margin
indicates higher competition among the banks. A competitive banking sector is key for smooth
financial intermediation and growth of the economy. Thus, low deposit rates relative to other
account-based bank charges and inflation, widens the bank interest rate margins between deposit
and lending rates and discourages savings mobilization, especially long terms savings. This
negates the country’s current and future growth potential. Similarly, a high interest rate margin
resulting from excessively high bank lending rates in relation to the deposit rates and the average
investment return in the economy discourages borrowing and bank credit.

In the presence of market failures due to lack of bank competition or low bank appetite for the
domestic currency, the Reserve Bank of Zimbabwe has, from time to time, been pronouncing
minimum deposit rates on both short and long-term deposits to encourage savings mobilization
and deeper financial intermediation. The policy pronouncements on the deposit rates have been
a positive policy tool for influencing returns on deposits. Thus, the Reserve Bank concomitantly
raised the deposit rates on ZWL savings and time deposits to 40% and 80% alongside the review
of the policy interest rate to 200% in July 2022. The increases were in line with prevailing
inflation developments and cushioned depositors against loss of real value on deposits through
inflation. The minimum savings and time deposit rates were subsequently reviewed downwards
to 30% and 50%, starting from the 1st of February 2023, also in line with prevailing and expected
inflation developments.

Figure 6: Average Lending Rates (RHS) and 90 Day Deposit Rates (LHS)


However, despite the direct interventions by the central bank to influence deposit rates in the
evidently prevailing market failures, banks do not seem to utilize this important interest rate tool
to influence both the level and term structure of domestic currency deposits. Figure 7 cross plots
the monthly average deposit interest rates on savings and deposits of maturity ranges from onemonth to 12-month deposits and the maximum corporate lending interest rates.

The figure shows at least three distinctive aspects of the market. The reviews on the deposit rates
represent pronouncements on the minimum deposit rates by the central bank, the presence of
appetite by banks to mobilize savings for on-lending, which should compel them to put a further
margin on the policy-based deposit rates. Thus, while the current minimum deposit rate required
by policy on time deposits is 50% per annum, banks offer up to 60% per annum for the 12-month
deposits compared to a maximum of close to 75% in February 2023. However, the average
margin between the deposit rates and maximum lending rates have remained wide despite the
fall between January and March 2023. The wide interest rate margin reflects the current global
trends wherein banks are increasingly relying more on non-interest income and less on
intermediated income through savings mobilization and on-lending; a development, which is
regressive and counter intuitive, regarding the promotion of sustainable growth. The wide margin
suggests the presence of significant capacity and scope for the banks to further attract and
mobilize savings and promote industry activity.

Jan-23
Feb-23
Mar-23
Apr-23
May-23
Jun-23
Jul-23
Aug-23
Percentage (%)
Percent (%)
Minimum 1-month
Minimum 3-month
Minimum 6-month
Minimum 12- month
Maximum Corporate Lending Rate

Figure 7 also shows lack of a distinct or pronounced relationship between the maturity profiles
of bank deposits and the deposit interest rates on the respective maturities. Long term sustainable
investment and growth requires long term financing and savings. In this respect, banks should
offer higher deposit interest rates on longer term deposits consistent with the Reserve Bank’s
policy requirements of deposits rates of 30% and 50% per annum for savings and time deposits,
respectively. In this regard, banks are encouraged to promote a culture of long-term savings
needed to sustain long term investment and growth by offering deposit rates that are aligned to
both the current inflation developments and the maturity profile of the deposits.


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.


WHOLESALEFX
01-August-23 03- Aug-23 08-Aug-23 16-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
18-July-23 25-July-23 01-Aug-23 08-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
542,480.15
601,650.01
497,893.08
884,829.72