19 February 2019

Zimbabwe: Forex Deposits Hit U.S.$600 Million

Photo: The Herald
Bank queues.

The decision to separate real time gross settlement (RTGS) foreign currency accounts from actual United States dollar accounts is beginning to pay off, amid indications that deposits for the latter have shot up to about US$600 million.

This was said by Reserve Bank of Zimbabwe (RBZ) Deputy Director for Economic Research Dr Nebson Mupunga yesterday during a breakfast meeting organised by the Employers Confederation of Zimbabwe (Emcoz) in Harare.

Dr Mupunga said it became critical to separate RTGS and actual US dollar accounts to deal with the rising demand for physical US dollars when depositors were depositing RTGS into their accounts. But after protests over the separation of accounts from citizens who felt short-changed considering that their deposits were nominally US dollar denominated, the nostro foreign currency accounts are doing well, in a move that preserves value for depositors.

"In the same account, we were depositing RTGS and US dollars, there was pressure in terms of the actual US dollar," said Dr Mupunga.

"That is why as the Central bank we took the decision to separate the accounts so as to preserve value and so as to attract those with actual hard cash to deposit in the banking sector and this has actually started paying dividends as you see.

"Now, nostro FCA deposits are on an increase to around US$600 million from maybe around $130 million."

The RBZ introduced that policy on accounts in mid-October last year.

Dr Mupunga said the jump in nostro FCA deposits is largely attributed to rising confidence in the financial services sector by individuals and corporates.

"So we are witnessing that confidence is now coming back into the financial sector.

"People are now having confidence (in the banking sector) and these are dividends of the deliberate policy to separate the RTGS and nostro accounts," said Dr Mupunga.

The country's foreign currency deposits are at their highest in several years.

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