Omega Ukama 
ZIMBABWE’s money market has undergone a wave of innovation with issuers diversifying offerings to balance investors’ needs for liquidity and value-preservation, a wealth management firm has said.
Some of the instruments in the market include certificates of deposit, commercial paper — short term unsecured debt notes issued by a company and bankers’ acceptances.
“We have already seen increased money market sophistication from private sector money market placements and increased hedge like features being introduced by players in the private sector,” First Mutual Wealth (FMW) said in a recent note.
“The banking sector has additionally done partnerships with banking clients for the creation of securities that can attract more funding for working capital and investment related capital expenditures.
“We believe that the Reserve Bank of Zimbabwe would send a strong signal for inflationary control if they were to introduce, in conjunction with the government, inflation linked treasury instruments for the 2021 outlook,” the firm said.
Investors with access to high yielding money market assets are, however, beginning to earn returns that are marginally above inflation.
FMW says the sustainability of such instruments earning real returns in the outlook remains fragile and hinges on the ability of the government to rein in inflation.
Analysts, who included Gift Mugano, are optimistic that inflation will continue to decline.
“By July this year, we will be below 100 percent in terms of annual inflation.
“If we sustain that, on the back of assumptions around production which has been quite noticeable in the agriculture sector thus guaranteeing the availability of raw materials to the manufacturing sector, we will provide a refreshing position on the macro-economic environment, particularly on saving foreign currency — which means we will have more leeway to stabilise the exchange rate further,” Mugano told The Financial Gazette last week.
It also comes as the Reserve Bank of Zimbabwe has escalated open market operations (OMO) to support its conservative monetary targeting framework.
The apex bank, which has this year reduced its quarterly target for reserve money growth to 22,5 percent from 25 percent, has mopped up close to $7 billion in OMO since January.
newsdesk@fingaz.co.zw
