The excess liquidity conditions on the Zimbabwe money market, which saw interest rates soften to negative levels, resulted last week in huge volumes of shares being traded in the equity markets.
As a result of the massive movement of investments from the money market to the equities market, the latter is seeing huge volumes of shares being traded, reports Standard Bank from Harare.
The Industrial Index rose by 31.75% last week, the seven-14 day rates fell to around 5% from around 200% the previous week, while rates on 30-day money fell from 250% to 50% during the same period. Rates on 60-day money fell from 300% to 60% while 90-day rates, which were being quoted around 480%, dropped to 80%.
“The future of the stock market depends on the measures that will be contained in the upcoming monetary policy review,” says a spokesman for Standard Bank. A new review will be announced by the central bank in the near future.
The money market has been gripped by excess liquidity conditions with daily averages peaking at between 3-4 trillion, says Standard . The recent scrapping of the statutory reserve ratio from 60% for commercial and merchant banks to 47,5% as well as the phasing out of the 91-day Treasury bills have reversed trends on the market.