TRYNESS TEMBO, Lusaka
LAST week, the Bank of Zambia (BoZ) continued to inject liquidity in the market on the back of open market operations (OMO) to reduce overnight interbank rate in the near term, financial market players note.
BoZ was on the OMO, which is an activity by the central bank to give or take liquidity in its currency to or from a bank or a group of banks and liquidity level which is currently at over K2.2 billion.
Cavmont Bank says the central bank was looking to lend K400 million to commercial banks.
“The central bank was still conducting reverse OMO and was looking to lend K400 million to commercial banks,” the bank says in its market report.
Similarly, Zanaco in its daily market report says the market continues to see the central bank seeking to inject liquidity in the market on the back of OMO and this is likely to push the overnight interbank rate lower in the near term.
On the local currency market, the Kwacha is expected to trade between K9.25 and K9.35 with a bias towards weakness.
The bank says the local unit continued to lose ground against the United States (US) dollar on Thursday for a second consecutive day.
It says the market appeared to be in short supply of the dollar as participants sought the currency in the morning session.
First National Bank in its daily treasury newsletter also says supply and demand dynamics are putting a strain on the local currency.
The bank says due to limited interbank activity and thin trading volumes, chances are that any further depreciation of the Kwacha is likely to be limited.
Meanwhile, copper and nickel on the London Metal Exchange (LME) prices inched down on Friday, undermined by concerns over weakening demand and oversupply.
Three-month copper on the LME had slipped 0.56 percentage point to US$5,667 a tonne.