The results of the 6th auction of the year were as follows:
Bank of Zambia received bids worth K75.6m – 12.6% (18.4% in previous auction) of the amount on offer. They allocated the full K75.6m under the various treasury bills. Yields for the 91 day bill spiked 18.8% from the previous auction to 9.5%.
This is the second auction in a row where the participation has been very weak. The central banks recent monetary tightening measures – reserve ratio up to 14%, policy rate up to 10.25% and overnight lending facility to 6% above policy rate – have been mopping up excess liquidity to help strengthen the Kwacha which has taken a toll on the appetite for t/bills, particularly from commercial banks.
This should be the trend at t/bill auctions in the short term until we see some significant Kwacha gains. The chart below shows how the Kwacha has been trading thin the last 12 hours:
The currency has seen some more gains over the last few days, dipping below the much vaunted $6 mark.
Trying to decipher this puzzle that is Zambia by using a variety of publicly available data (structured and unstructured) in conjunction with my own skill/experience. * * *