Boz returns on local money market


FINANCIAL market players feel the Bank of Zambia (BoZ)’s return on the open market operation (OMO) signals that the central bank needs to mop up liquidity from the local money market.
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.
Cavmont Bank says the central bank was still conducting OMO in a bid to reduce market liquidity.
“The amount being offered was K300 million and rates accepted were averaging 6.59 percent,” the bank notes in its market report.
The commercial banks’ aggregate current account balance increased by K686.26 million to K1,403.48 million while the overnight borrowing and lending rate rose by 0.15 percentage point at 13.39 percent.
Total funds traded on interbank were K396.20 million
Similarly, First National Bank (FNB), in its daily newsletter, says, “The return of OMO gives us a slight indication that the central bank thinks there is a bit more liquidity in circulation than it would like. We have, however, seen a slight increase in interbank, with overnight funds trading at 13.39 percent.”
The bank notes that there has been subdued activity in the fixed income market.
On the local currency market, FNB says the currency continues to trade between gains and losses without any clear direction, with an expected range of K9.50 -K9.60.
“There seems to be somewhat equal volume on both sides of the market, although a lack of price discovery creates panic in the market.
We expect to see continued swings but look set to play in the range of K9.50 – K9.60 today [Thursday],” the bank notes.

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