To keep up appearances, the Bank of Zambia (BoZ) on Monday removed K100 million from circulation in order to give the impression that the Kwacha is performing well against other currencies such as the US Dollar, Uk Sterling, Euro, Rand etc.
The difference is that other currencies are stable and strength because they are backed by production and stable policies in their countries, the Zambian Kwacha flip flops due to the Bank of Zambia operations. There is simply no production to support the Kwacha and PF policies have never been stable.
Due to the BoZ buying off K100 million from commercial banks, the Kwacha has become scarce, leading to further artificial strengthening of the Kwacha which is now trading in the ranges of K9.50, and K9.60 against the United States (US) dollar.
The practical effect of this is that ordinary people can hardly access the money because the bank of Zambia is hiding it. Trade has been suppressed because only a few people can access the money. All this is done just to impress Edgar Lungu and his fellow thugs that the Kwacha is a strong currency. Without BoZ interference, the true value of the Kwacha is about K20 per US dollar.
Both Cavmont and First National Bank (FNB) observed that BoZ was on Monday active on the money market via the open market operations (OMO), which is the buying and selling of government securities in the open market to expand or contract the amount of money in the banking system.
Cavmont, in its market report, indicates that the central bank returned to the market after being absent for some weeks to conduct OMO, and was looking to reduce market liquidity by K100 million.
FNB also notes that the central bank managed to withdraw K100 million through OMO.
“After being absent from the market for a couple of weeks, the central bank yesterday [Monday] came into the market looking to wipe out liquidity of up to K100 million,” the bank says in its daily newsletter.
Total bids amounted to K155 million, out of which K100 million was accepted at 7.4 percent overnight, while unsuccessful bids were in the range of 12 percent and 13.70 percent.
On Monday, the money market liquidity levels experienced a further drop, closing at almost K1.3 billion from about K1.4 billion.
Motivated by politics, the Bank of Zambia only seems to be interested in strengthening the Kwacha at the expense of production