Reserve money drops to ZW$28.05 billion

0
478
  • Reserve money decrease by 0.80%
  • Bank liquidity down by ZW$12.29 million
  • Required reserves declined by ZW$217.99 million

Harare – Zimbabwe’s reserve money dropped by a marginal 0.80% to ZW$28.05 billion for the week ended 8 October 2021 owing to government revenue collections, the Reserve Bank of Zimbabwe (RBZ) reserve money update has revealed.

The decrease in reserve money is from a previous week ending 1 October 2021 position of ZW$28.28 billion.

RBZ said the decline in reserve money reflected declines of ZW$217.99 million and ZW$12.29 million in required reserves and bank’s liquidity (RTGS balances) at the Central Bank respectively and partially offsetting the decline was an increase in currency issued of ZW$4.96 million.

“The fall in market liquidity was mainly due to government revenue collections, which saw its deposits at RBZ rising by ZW$6.18 billion over the week,” RBZ said in the update.

Reserve money refers to currency in circulation plus commercial banks deposits with the central bank.

It is typically called base or high-powered money, implying that it has a higher propensity to impact monetary stability compared to M2 and M3 (broad money).

Meanwhile, in July this year, the Monetary Policy Committee (MPC) chaired by RBZ governor, John Mangudya resolved to further tighten the monetary policy by reducing the reserve money growth target from 22.5% per quarter to 20% per quarter going forward while continuing to review the reserve money growth target to achieve and maintain stability of inflation and exchange rate in line with developments in other economic fundamentals.

Earlier, the Central Bank had projected to tame reserve money growth to under 22.5% per quarter in 2021 from 25% in 2020 in a bid to maintain a grip on the relative inflation and exchange rate stability being currently experienced in the country.

Equity Axis News

LEAVE A REPLY

Please enter your comment!
Please enter your name here