ZIMBABWE’S broad money supply, which consists of domestic and foreign currency deposits, rose $417 billion in October, a 15 percent increase from $364 billion in September, the Reserve Bank of Zimbabwe (RBZ) has said.
According to the central bank’s economic review for October, which was published last week, the composition of broad money was local currency deposits, 56 percent; foreign currency deposits, 42 percent; and currency in circulation, 0,53 percent.
Reserve Bank of Zimbabwe governor, John Mangudya
“On a month-on-month basis, broad money increased by $52 billion or 14 percent, from $364 billion recorded in September 2021. This was largely reflected in increases of $28 billion and $22 billion in foreign currency deposits and local currency transferable deposits, respectively,” said RBZ.
Recently RBZ said it was widening the scope of its money supply surveillance to limit inflation, which hit a high of 838 percent last year.
To curb inflation amid runaway money supply growth the apex bank has been pushing a monetary targeting drive anchored on reserve money aiming.
Reserve money is, however, a narrow measure as it excludes other components of money supply such as foreign currency deposits.
“In view of the significant increase in total bank deposits during the past year, the Monetary Policy Committee (MPC) has resolved to monitor developments on broad money to minimise its possible destabilising effects on inflation and the exchange rate,” RBZ governor John Mangudya said in a statement after an MPC meeting.
During the month under review, the bank said domestic credit increased by 16 percent, to $262 billion.
The growth was largely driven by increases in banking system net claims on government, 36 percent; public non-financial corporations, 17 percent; and credit to the private sector, 11 percent.
Credit to the government was largely composed of Treasury bill holdings. On an annual basis, local currency deposits included in broad money registered a growth of 230 percent, while currency in circulation increased by 108 percent.
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