April broad money supply up 360% year-on-year

30 Jun, 2020 - 09:06 0 Views
April broad money supply up 360% year-on-year

eBusiness Weekly

Business Reporter

The Reserve Bank of Zimbabwe has released its monthly economic statistics showing broad money supply grew by 48 percent between December 2019 and April 2020.

Year-on-year broad money grew by 360 percent, according to data provided by the central bank.

Curbing money supply growth is seen as one of the solutions to the country’s currency volatility.

The monetary authorities are currently using monetary targeting as a way of managing currency instability.

The task is however proving difficult given various pressures including currency depreciation.

During the period under review, Broad Money, which consists of domestic and

foreign currency deposits, totalled $51,99 billion as at End-April 2020.

“The foreign currency deposits were equivalent to $19,46 billion (37,44 percent), while local currency deposits amounted to $31,48 billion (60,56 percent),” reads part of the April Economic Review Report.

Currency in circulation constituted the balance of about ZW$1.04 billion (2.00%).

“Over the year to April 2020, foreign currency deposits grew by 1 009.96 percent, largely reflecting the impact of exchange rate depreciation, from $3.26/USD in March 2019 to $25/USD in March 2020.

“Thus, 43,59 percent of the annual growth in broad money in April 2020 came from the revaluation adjustment of the foreign currency component of the deposits, due to the exchange rate movement.”

On the other hand, the annual growth in the local currency component of deposits was due to normal money multiplier effects in the economy, against the background of an inflationary environment.

Currency in circulation increased by 111,96 percent to $1.04 billion over the year to April 2020, reflecting rising demand for currency for transaction purposes. Figure 9 shows broad money components as at end of April 2020.

As of June 19, 2020, cash in circulation was now at $1,616 billion.

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