By 
Liquidity conditions in Zambia’s money market tightened during the week ending October 11, 2024, with balances at commercial banks shrinking by 12.1 percent to K4.8 billion from K5.5 billion the previous week.
This marks the sharpest drop in liquidity over the past two weeks.
The figures were detailed in ZANACO Bank’s weekly financial markets update, released on Monday.
According to the report, the tightening liquidity was mainly attributed to the settlement of treasury bills, amounting to K1.4 billion, by market participants.
“The tightening of liquidity conditions last week was largely a reflection of purchase cost settlements for treasury bills by market players to the tune of K1.4 billion,” the report stated.
However, the impact of these outflows was somewhat softened by improved government paper maturities.
These maturities have kept liquidity conditions relatively loose since mid-September 2024, when the Bank of Zambia paused its execution of expansionary Open Market Operations.
Despite the liquidity squeeze, the weighted overnight interbank rate declined by 15 basis points to 13.36 percent down from 13.51 percent the previous week, indicating a minor easing in short-term borrowing costs among banks.
Looking ahead, the Bank of Zambia expects liquidity levels to remain elevated, supported by an influx of government paper maturities exceeding K400 million. This is likely to drive demand during Thursday’s treasury bill auction.
“In turn, this should be supportive of demand during Thursday’s treasury bill auction,” the update concluded.
WARNING! All rights reserved. This material, and other digital content on this website, may not be reproduced, published, broadcast, rewritten or redistributed in whole or in part without prior express permission from ZAMBIA MONITOR.
Comments