Reserve Money in the country dropped 0.46 percent, shedding ZWL$ 126.89 million to ZW$28.25 billion during the week ending 24th December 2021, compared to the previous week’s position of ZW$28.38 billion, the Reserve Bank of Zimbabwe has said.
Reserve money, refers to local banks’ balances sitting with the RBZ which are kept for purposes of lending to various economic participants without negatively impacting the economy.
In the local context, a decline in reserve money is welcome, as it restricts money supply into the economy which has been creating instability to the local currency.
Authorities have been monitoring money supply closely to ease pressure on inflation which has been bedeviling the economy in the past few years.
“The decline in reserve money largely reflected a decrease of ZW$752.05 million in banks’ liquidity (RTGS balances) at the Central Bank, which was partially offset by increases of ZW$612.27 million and ZW$12.89 million in required reserves and currency issued, respectively,” the RBZ said.
The Bank, further said Government deposits at the Reserve Bank increased by ZW$5.51 billion, resulting in liquidity withdrawal from the market.
Last year, the Central Bank said it was aiming to maintain money supply targeting reserve money growth not exceeding 15 percent by year end.
Monthly change in reserve money growth in November reached 15.72 % above central bank target.
However, preliminary estimates of reserve money growth during the three weeks to 24 December so far highlight a decline having recorded a 1.76 percent growth during the first week followed by declines of 1.28 percent and 0.45 percent in the following weeks.
Previously, growth in money supply has been pushed by subsidies on fuel, electricity, and grain and government expenditure.
