IH sees liquidity improving on mining and agriculture rebound

LOCAL financial services firm, IH Securities, has projected an improvement in the liquidity situation on the back of a recovery in agriculture and mining sectors.

Last year, the mining sector was hindered by a volatile global commodity market, which led to mixed export returns from Zimbabwe’s minerals. Meanwhile, the El Niño-induced drought cut agricultural output, limiting forex from major exporting crops.

However, with the global commodity market expected to rebound this year and La Nina-induced conditions expected to raise agricultural output, the projected export returns are expected to shore up market liquidity.

This comes as the country is facing a liquidity crunch caused by stringent fiscal and monetary measures meant to support the Zimbabwe Gold currency.

“As per the MPC (Monetary Policy Committee), the outlook is that annual inflation will moderate in the final quarter of 2025 to sub 30%,” IH Securities said in its March 2025 report.

“Weak La Nina conditions have aided the country in receiving above average rainfall in the just passed summer cropping season, likely overturning drought conditions seen in 2024. As at the end of February, the country had achieved 99% of the targeted 1,8 million tonnes of maize.”

The firm, however, noted that in the northern parts of the country, there was below normal rainfall that may cause pockets of food insecurity.

“At national level, we however, foresee likelihood of an uptick in bottom of the pyramid liquidity,” IH Securities said.

“This will be aided by improvements in the agricultural sector as well soaring prices in the gold sub sector, giving upside to consumer-facing companies and gold producers.”

The firm noted that the monetary space has seen relative stability with the exchange rate premium moderating to 31% year-to-date from 43% at the beginning of the year.

“The official exchange rate opened the month of March at US$1:26,5830 and depreciated slightly to US$1:26,7654,” IH Securities said.

“The parallel market rate also notably took a downtrend within the month; however, the ZiG depreciated faster at 4,48% against the dollar versus on the official market.”

ZiG month-on-month inflation slowed down from 10,5% in January down to -0,1% in March, owing to the relative stability of the domestic currency.

“Month-on-month USD inflation slowed down to 0,1% in March, with food and non-alcoholic beverages being the biggest contributors. Annual USD inflation remained flat at 15,0% versus the 15,1% registered in February,” IH Securities said.

“The last sitting of the Monetary Policy Committee conducted in March expressed satisfaction with the current monetary and financial conditions,” IH Securities said.

“As such, the bank policy rate has been maintained at 35% while statutory reserve requirements for savings and time deposits have been maintained at 15% for both local currency and those for demand and call deposits at 30%.”

IH Securities, however, noted that the local currency’s reliability would be tested this month with the release of the first ZiG annualised inflation numbers.-newss