TRYNESS TEMBO, Lusaka
THE Bank of Zambia (BoZ) maintained its presence in the market amid last week’s treasury bill auction being over-subscribed to attract bids worth over K1.4 billion against an offer of K810 million.
This means that there was demand for financial securities, exceeding the total initial target that was offered as BoZ participates in the open market operations (OMOs), an activity by the central bank to take liquidity from a bank or a group of banks and liquidity.
Cavmont Bank and Zanaco say last week’s treasury bill was over- subscribed.
“Thursday’s treasury bill auction was over-subscribed by 74.37percent, K1.41billion was bid for out of the K810 million which was offered by the central bank.
“The 273 days yield reduced to 8.50 percent from 9.50 percent, while yields on other tenors remained relatively unchanged,” the bank says in its market report.
And in its daily treasury newsletter, Zanaco notes that BoZ was in the market for both morning and afternoon sessions on operate on the OMOs even though there was the 19th treasury bill auction for this year.
Zanaco, however, says the results for the auction showed that the shorter term instruments were under-subscribed leading to a rise in interest rates from 9.023 percent to 9.1645 percent for 91 days.
The 182 days tenor witnessed a marginal increase from nine percent to 9.15 percent.
Meanwhile, rates for the 273 days instrument dropped to 8.5 percent from 9.5 percent while the highly-subscribed 364 days also posted a reduction to 14.8922 percent from 15.33 percent.
On the local currency market, the Kwacha is anticipated to remain under pressure from the global strength of the United States (US) dollar, which is hurting other emerging market currencies although the treasury bill auction could offer short-term support.
Zanaco projects that the local unit is anticipated to trade in the range of K9.42 and K9.52.
Similarly, United Bank for Africa in its treasury newsletter, says the Kwacha on Friday opened trading at K9.45 and K9.50 on the interbank weaker than Thursday’s close.
The Kwacha further weakened due to short supply of dollar in the market and predictions are generally that the local unit will trade on the back foot against the greenback.