Dol­lar scarcity deep­ens in Zam­bian mar­ket...

Zambian Business Times - - FRONT PAGE -

The Zam­bian financial mar­kets have con­tin­ued to trade thin with dol­lar scarcity com­pound­ing. A check at the key com­mer­cial banks on Fri­day 06 Oc­to­ber, dol­lar trad­ing was muted with some banks not trad­ing at all. ( Thin mar­kets are ones where trad­ing is close to im­pos­si­ble due..

BOZ watches the mar­ket closely for trader mar­ket dis­ci­pline The Zam­bian financial mar­kets have con­tin­ued to trade thin with dol­lar scarcity com­pound­ing. A check at the key com­mer­cial banks on Fri­day 06 Oc­to­ber, dol­lar trad­ing was muted with some banks not trad­ing at all. ( Thin mar­kets are ones where trad­ing is close to im­pos­si­ble due to non-availabili­ty of cur­rency on one hand). The mar­ket is thin dol­lars to the ex­tent that any sup­ply that shoals is rapidly ab­sorbed. The kwacha closed Fri­day at K11.89/USD a level weaker than the ap­pre­ci­a­tion recorded of K11.40/USD on ac­count of some dol­lar con­ver­sions to Kwacha by play­ers in readi­ness for the tax sea­son.

The Cen­tral Bank has kept a tight grip on mar­ket mon­i­tor­ing to en­sure mar­ket dis­ci­pline in light of the re­cent de­pre­ci­a­tion of the lo­cal unit which has ad­versely im­pacted busi­ness houses. It is ex­pected that dol­lar con­ver­sions to fund kwacha tax obli­ga­tions will give tem­po­ral sup­port in the im­me­di­ate term. How­ever, cur­rency pres­sure re­mains high in light of the cur­rent eco­nomic sen­ti­ment that has dwin­dled sig­nif­i­cantly cou­pled with a strong dol­lar en­vi­ron­ment that has fu­elled a green back fetish.

Zam­bia’s cur­rency pres­sure has trans­mit­ted to the money mar­kets which is cur­rently pric­ing pri­mary mar­ket trea­sury bills above 20% in the one year as off­shores price these as­sets 500-700bps higher in the sec­ondary mar­ket.

The kwacha recorded a steep one-day jump of 6.45% last week on Tues­day 02 Oc­to­ber on the back of dol­lar sales by some cor­po­rates. The Kwacha has started to re­verse most of the gains as dol­lar de­mands per­sists.

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