TRYNESS TEMBO, Lusaka
DESPITE the increase in market liquidity levels, the central bank was out of the open market operations (OMO), which is used to help stabilise the Kwacha against other major convertible currencies.
The Bank of Zambia was absent on the OMO which is an activity by the central bank to take liquidity from a bank or a group of banks. Liquidity levels are currently at K857.70 million.
And Zanaco says the cost of interbank borrowing is expected to remain above 14 percent in the near term.
“The day experienced an increase in money market liquidity levels, closing at K857.70 million on Monday from the previous day’s K632.21 million. The weighted average overnight interbank rate was unchanged at 14.38 percent,” the bank says in its daily treasury newsletter.
On the local currency market, the Kwacha is expected to remain steady against the United States (US) dollar in the trading session ahead with a bias to gain as corporates begin to convert dollars to meet month end obligations. It should remain within a trading range of K9.15 and K9.25.
The bank says the local unit posted gains against the dollar on Monday as slackening corporate demand spurred a sell-off in the interbank market.
Zanaco says the Kwacha opened trading on Monday at K9.20 and K9.25, unmoved from Friday’s close where it traded for most of the morning.
It says the afternoon session witnessed healthy corporate dollar inflows and an interbank sell off to see the local unit close at a high of K9.17 and K9.22 on the bid and offer respectively.
Cavmont market report also says the short to medium term outlook for the local unit seems to indicate that it is likely to remain firm, with a bias towards the upside.