Treasury bills auction over-subscribed


THE Bank of Zambia (BoZ) treasury bill auction was last week significantly over-subscribed, attracting bids amounting to over K1.7 billion, as the Kwacha is expected to continue on a strong note against the United States (US) dollar due to anticipated increased inflow from corporates, Cavmont says.
This means that there was demand for financial securities exceeding the total initial target that was offered.
According to the bank’s market report, the central bank offered K810 million worth of government securities to investors.
“Thursday’s treasury bill auction was over-subscribed by over 120 percent as total bids amounted to K1, 782.39 million, against K810 million which was being offered,” the report reads.
The bank says there was also a further drop in interest rates across all tenures, with the largest being seen on the 364 days which dropped by 1.78 percent from 17.47 percent, to 14 percent.
In the foreign exchange market, the bank says despite its recent loss, the local unit’s performance is likely to remain resilient in the short to medium-term, as current trends seem to show a bias towards the upside.
On Friday, the local unit reversed some of its gains following a reduction in supply and an increase in demand from exporters.
The Kwacha opened trading at K9.50 and K9.55, and was by the afternoon being quoted at K9.57 and K9.62.
The Kwacha closed trading at K9.60 and K9.65, K0.1 weaker than its opening levels.
First National Bank in its daily newsletter however says the Kwacha is expected to be boosted against the dollar as corporates convert their greenback to meet their month-end tax obligation.
“As we approach month end, we could see continued dollar conversions, as exporters meet their obligations. Dollar/Kwacha is therefore expected to trade within the current range of K9.60 and K9.65,” the report reads.

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