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BoZ steps in market to mop up excess cash

THE Bank of Zambia on Tuesday intervened in the money market through the Open Market Operations to mop up excess liquidity. The market last week saw around K1.5 billion in circulation, a situation that led to the kwacha’s weakening against foreign currencies.

The Bank of Zambia’s involvement in Tuesday’s trading saw liquidity reduce to K916 million.

“The central bank was yet again in the market attempting to mop up excess liquidity through OMO. The combination of OMO and taxes saw liquidity reduce to ZMW916m. The overnight interbank lending rate edged higher to 9.39 per cent,” according to FNB Zambia’s daily market update issued yesterday.

During Tuesday’s trading, the kwacha traded at between K10.28 and K10.33 against the United States dollar.

“The tempo of Tuesday’s trading session slowed down from the day before. Demand and supply had an equipoise of flows. USD/ZMW was unchanged at K10.280/K10.330. With no flash of improved supply sentiments and the continuous weak economic backdrop, we expect the kwacha to weaken further. We see resistance at 10.400 and support around 10.280,” FNB Zambia stated.

On the international market, oil prices rose following a report of declines in US crude inventories and as looming sanctions against Iran raised expectations of tightening supply, while top producer Russia warned of a fragile global crude market.

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