Business

BoZ to mop up Kwacha liquidity

BOZ

TRYNESS TEMBO, Lusaka
THE Bank of Zambia (BoZ) has continued to be active on the money market with intention to withdraw excess Kwacha liquidity amounting to K950 million to further strengthen the local unit against the United States (US) dollar , financial market players say.
Generally, the Kwacha is trading in the ranges of K9.50 and K9.60 against the US dollar.
Both Cavmont and Zanaco observed that BoZ was on Tuesday active on the money market via the open market operations (OMO), which is the buying and selling of government securities in the open market to expand or contract the amount of money in the banking system.
Cavmont, in its market report, indicates that the Central Bank has continued to be on the market after being absent for some weeks to conduct OMO, and was looking to reduce market liquidity by K950 million.
Zanaco also says given the current levels of liquidity and the central bank’s presence in the market on OMO, rates are expected to stay above 12 percent in the near term.
“The liquidity levels in the money markets significantly dropped to K309.03 million from a close of K842.06 million the previous day,” the bank says in its daily treasury newsletter.
On the local currency market, Zanaco says the Kwacha is expected to be stable against the dollar in the near term.
The local unit is anticipated to trade in the range of K9.50 and K9.60.
“See-saw trading that has characterised the markets in recent sessions is likely to extend in the near term, though we expect a downside bias emanating from the increased demand for the local unit in the money markets,” the bank says.
UBA also says the Kwacha is expected to trade in the range K9.60 and K9.750 all being equal.
Yesterday, the local currency market opened the trading session at K9.58 and K9.63 on the interbank, stronger than Tuesday’s close.
The bank says the local unit traded firmly against the greenback as demand for the local unit increased.

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