The Reserve Bank of Zimbabwe (RBZ) has in its latest report said reserve money increased by $2.2 billion to $17.6 billion for the week ending October 16, 2020.
According to the central bank, the surge is an indication of a rise in banking sector deposits at the RBZ as the Government paid its workers.
The central bank also reported that the stock of reserve money rose $2.1 billion while banks’ statutory reserves surged by a marginal $0.1 billion during the period under review. Reads the report in part:
The increase in banks’ liquidity at RBZ was largely attributable to the decline of Government deposits at RBZ by $1.4 billion as the Government was paying salaries to its employees.
RBZ explained that a reduction in Government deposits at RBZ represents an injection of liquidity in the banking sector whilst an increase of deposits represents the withdrawal of money from the banks.
It also attributed the balance of $700 million increase in reserve money to the purchase of foreign exchange by the RBZ through banks for purposes of funding the foreign exchange auction system introduced in June this year.
The update also observed that purchases of foreign currency by the RBZ increase the amount of liquidity in the market, whilst the sale of foreign currency by the monetary authorities has the effect of withdrawing liquidity from the market.
More: The Herald