CYNTHIA MWALE, Lusaka
IN A bid to stabilise the Kwacha, the Bank of Zambia (BoZ) continued its presence in the market via the open market operations (OMO) window on Thursday seeking to withdraw K1.4 billion, as the local currency maintained its downward trend against the United States dollar due to demand for the greenback.
Financial market players say the central bankâ€™s sustained presence via OMO, which is the buying and selling of government securities in the open market to expand the amount of money in the banking system, is aimed at strengthening the fragile Kwacha, which is anticipated to trade within a K10.50- K10.65 range this week.
According to Zanaco daily treasury newsletter, bids amounting to K710 million were received and a total of K630 million was accepted with successful yield rates at 15 percent on over-night and 14.5 percent on seven days.
On the local currency market, the Kwacha on Friday was likely to trade on the back foot on continued dollar demand and should float within a K10.50 â€“ K10.65 range in the short term.
â€œThe local unit opened the day at K10.48/10.53 and immediately showed a sign of weakness as demand for the greenback increased which saw it trade low on the day. By the close of trading, the Kwacha was quoted at K10.500/10.550 …
â€œThe Kwacha continued its slide on Thursday, undermined by substantial demand for dollars from the interbank and corporate buyers, and traders predicted the trend would continue next week [this week],â€ the bank predicts.
Cavmont Bank also observes that on Thursday, the Kwacha edged closer to the K10.6/US$1 psychological barrier against the US dollar owing to increased demand for the greenback which has continued to outstrip supply.
â€œThe currency pair was trading at K10.50 / K10.55 in early trade but was later seen being quoted at K10.525 / K10.575, [closing] at K10.54 / K10.59, K0.04 weaker than the dayâ€™s opening level,â€Cavmont market report.
On commodities market, Three-month copper on the London Metal Exchange traded flat at US$4,615 a tonne by 0039 GMT, after falling 1.1 percent in the previous session when prices touched the weakest since May 24 at US$4,565.50 a tonne.
CYNTHIA MWALE, Lusaka