Reserve money increases to ZW$ 27.18 billion

By Owen Mandovha

THE Reserve Bank of Zimbabwe has revealed that reserve money in the economy has increased to over ZWL$27 billion, as the central banks continues with its efforts to bring down inflation figures.

Reserve money decides the level of liquidity and price level in the economy, hence the need for financial prudence on the part of monitory authorities to ensure economic stability.

It is against this background that the announcement of reserve money growth by the Reserve Bank of Zimbabwe should come as a strong indication of the success of efforts by authorities to arrest price increases.

In a statement, the RBZ revealed the country’s reserve money position which shows that by the week ending 14 January 2022 reserve money had increased by over 1 billion Zimbabwe dollars to over 27 billion Zimbabwe dollars.

Partially offsetting this increase was a decline of about 118 million Zimbabwe dollars in
banks liquidity.

The increase in the Reserve Money is attributable to the revised statutory reserve ratio which now stands at 10 percent from percent.

The latest position signals that the Reserve Bank of Zimbabwe continues to keep tabs on inflation by mopping up excess liquidity as part of its inflation targeting policy.

The Reserve Bank of Zimbabwe’s inflation flight has yielded results with annual inflation rate now standing below 60 percent compared to over 800 percent two years ago.

Analysts predict that the annual inflation rate is likely to go below 20 percent by yearend, which reflects the success of the monetary reforms which were initiated by Government in order to deal with the evil of inflation which had threatened economic stability.

Recently the Reserve Bank of Zimbabwe Governor Dr John Mangudya was recognised for his sterling efforts to fight inflation following his upgrading from the D Class to Class by the Global Finance on Central Bank’s Governor’s Report.