THE Bank of Zambia (BoZ) tender for treasury bills was undersubscribed last week, attracting total bids amounting to K288.05 million against an offer of K900 million.
On Thursday, Government intended to borrow K900 million from the domestic market through issuance of treasury bills on a discount basis offered by the central bank, but only managed to attract bids amounting to K288.05.
Zanaco says the low participation in the auction put pressure on the rates as yields significantly rose across all tenors.
The bank says the 91 days tenor increased to 22 percent, from 15 percent, while the 364 days yield rose to 26 percent, from 21.5 percent.
“The central bank’s tender for treasury bills was undersubscribed, attracting total bids amounting to K288.05 million against an offer of K900 million with all bids successfully allocated,” the bank says in its treasury newsletter.
Meanwhile, the Kwacha was capped between K10.95 and K11.15 on Friday last week.
The bank says slow market activity coming out of the holiday is expected to quicken over coming sessions, and there are indications of the local unit being on the weak side due to the increasing demand for the United States (US) dollar.
“Sluggish market activity coming out of the holidays is expected to quicken over coming sessions and hints at a weaker Kwacha as demand for the dollar picks up, and in line with a broad strengthening of the greenback in international markets,” the bank says.
Zanaco says the Kwacha was unchanged on Thursday at K11.01 and K11.03 for a second day running.
It says matched flows and slow market activity continued to keep the currency range-bound.
Cavmont Bank in its market report also says the Kwacha closed trading on Thursday at K11.04 and K11.06, which was K0.03 weaker than the day’s opening rate.
The bank says the local currency moved in tandem with other emerging market currencies which come under pressure as a result of a further slump in commodity prices.
On the regional front, the South African rand appreciated to 15.954 on Friday from 16.064 on Thursday, while the Botswana pula depreciated to 11.388 and 11.1381, and Kenyan shilling to 102.189 and 101.564.
On the commodities market, the price of copper tumbled on Thursday, hitting its lowest in nearly seven years, as plunging China equities highlighted the country’s economic problems, and reinforced concern about demand for industrial metals.
Benchmark copper on the London Metal Exchange was down 2.9 percent at US$4,486 a tonne.