TRYNESS TEMBO, Lusaka
THE Bank of Zambia (BoZ) has continued to operate on the open market operations (OMOs) to mop excess liquidity to prevent the Kwacha from further dropping against major convertible currencies.
The local unit opened the week at K8.80 and K8.95 against the United States dollar, and slightly dropped on Tuesday and yesterday to K8.97 and K9 for bid and offer respectively.
In recent weeks, the BoZ has participated on the OMO, an activity by the central bank to take liquidity from a bank or a group of banks.
Both Cavmont and Zanaco note that the central bank was on the local money market on Tuesday seeking to mop out excess liquidity amounting to K900 million.
Cavmont in its market report says the money market witnessed a further increase in liquidity levels to over K1.5 billion from about K1.12 billion on Tuesday.
“Commercial banks’ aggregate current account balance increased by K458.2 million to over K1.58 billion while the overnight borrowing and lending rate decreased by 0.14 percentage point to 12.18 percent.
“Total funds traded on interbank were K205.50 million,” the bank says.
Zanaco also says out of the total K900 million, a total of K690 million was successfully withdrawn at 11.84 percent on overnight and 18.73 percent on seven days.
On the local currency market, the Kwacha continues to show vulnerability as demand for the local unit declines against the greenback.
In its daily treasury newsletter, the bank says in the short term, the local currency is expected to trade within a range of K8.97 and K9.07.
Zanaco says the Kwacha weakened further on Tuesday’s trading session as interbank greenback demand continued to outweigh supply.
The Kwacha opened the day at a bid and offer of K8.87 and K8.92 respectively in line with its previous day’s close.
On the commodities, copper price on the London Metal Exchange (LME) yesterday slipped but stayed within the reach of two-year highs hit earlier this week, as a slightly firmer dollar sparked profit-taking while a brightening view of China’s growth prospects underpinned prices.
Three-month copper on the LME slipped by 0.5 percentage point to US$6,315 a tonne, following a small loss in the previous session.
Prices jumped into a new range above US$6,000 a tonne late last month, striking the highest since May 2015 at US$6,400 a tonne.