by Grace Chekai

The purchase of foreign currency from the market by Reserve Bank of Zimbabwe (RBZ) and Government expenditures has led to an increase of Reserve money, the Harare Post has learnt.

According to the RBZ weekly Update On Reserve Money document posted today on social media it stated that, "Reserve money increased by ZW1 037 million over the week ending 4 September 2020,largely reflecting an increase of ZW$969 million in banks' deposits at the Reserve Bank.

"The increase in banks' liquidity was attributable to the purchase of foreign exchange from the market by RBZ and Government expenditures, all of which raised the deposit levels in the banking system.

The document also stated that the foreign exchange purchases by RBZ are mainly used to fund the auction.

It further stated that,” In addition, required reserves, currency in circulation and other deposits at RBZ also marginally increased during the week under review."

The document further revealed that the bank deposits as at week ending 28 August 2020 was ZW2 052 and at week ending 4 September 2020 they were at ZW2 081.

According to the same document, the RBZ’S  RTGS liquidity as at week ending 28 August 2020 were at ZW8 591 whilst at week ending 4 September 2020 they were at ZW9 560.

The document also stated that the currency Reserve Money Ratio as at 28 August 2020 was at 16.9 percent whilst at week ending 4 September 2020 it was at 15.8 percent.

Economic Analysts have commended this development saying that the increase in Reserve money will go a long way in financing the country's payments deficits, increasing income from larger purchases of foreign goods, services and securities.