KALONDE NYATI, Lusaka
IN AN effort to stabilise the money markets, the central bank on Tuesday was considering to mop up excess money amounting to over K100 million.
The Bank of Zambia (BoZ) wanted to withdraw K130 million from the market through open market operations (OMO), but no bids were received from the commercial banks.
According to Zanacoâ€™s treasury newsletter, BoZ was on Tuesday afternoon in the market via the OMO, which is the buying and selling of government securities in order to expand or contract the amount of money in the banking system, to remove excess funds.
In the foreign currency market, the Kwacha, which strengthened on Tuesday due to support by reduced local currency liquidity, is expected to keep up the momentum on the back of a bond auction.
â€œAn interbank sell-off in expectation of more dollar in-flows from local and offshore investors targeting the upcoming Bond auction is expected to boost the Kwacha further,â€ the bank says.
At 08:30 hours, commercial banks quoted the local unit at K9.38 and K9.43, unmoved from Thursdayâ€™s close.
Continued dollar inflow from corporate and interbank trades saw the Kwacha touch a high of K9.36 and K9.41 on the bid and offer respectively, where it traded until close of market.
Similarly, United Bank of Africa (UBA) says the local currency market, which opened Tuesdayâ€™s session trading at K9.45 and K9.50 on the interbank at par with Thursdayâ€™s close, is expected to remain on the front foot against the greenback.
â€œWe expect the local unit to trade in the range K9.40 and K9.60 all being equal,â€ the bank says.
First National Bank (FNB) also says the currency has continued to hold its own on the back of weaker-than-normal demand rather than over supply.
â€œPerhaps the tight funding conditions have put a dampener on demand. The trading pattern mirrors that of last week. The current range appears firmly intact for the short week.
â€œThe Government hopes to seal the IMF deal by the end of the month. The Finance minister hopes the country can access up to US$1.6 billion. The news did very little to trigger market moves. The bond market remained quiet – reserving all action for the auction on Friday,â€ FNB says.
KALONDE NYATI, Lusaka