TRYNESS TEMBO, Lusaka
DESPITE reduced market liquidity levels, the central bank was in the open market operations (OMOs) on Tuesday to further mop out excess funds to continue stabilising the
Kwacha against major convertible currencies.
The liquidity currently stands at K350.31 million, according to Zanaco’s daily treasury newsletter.
The Bank of Zambia (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.
“A total of K135 million was successfully withdrawn from the market at weighted average rates of 15.75 percent on overnight, 19 percent on seven days and 19.75 percent on 14 days,” Zanaco notes.
On the local currency market, the Kwacha is expected to continue trading flat against the United States dollar in the days ahead due to thin trading conditions.
Zanaco forecasts the Kwacha to trade in the range of K9.25 and K9.35 in the short term although market activity is expected to pick up after settlement of wages and other month-end obligations.
The Kwacha was flat on Tuesday as trade volumes remained slim and unmoved with reduced corporate activity, keeping the local currency within a tight range against the dollar.
It was unchanged at K9.30 and K9.35 on bid and offer respectively, at opening and closing sessions.
Both United Bank of Africa (UBA) and Cavmont anticipate the Kwacha to be stronger against the greenback.
In its treasury newsletter, UBA says, “In the near term, we expect the local unit to trade in the range K9.30 and K9.45 all things being equal.”
Cavmont says current market conditions suggest that the currency pair is likely to continue trading within current levels in the short term, with a bias towards the Kwacha to further gain.