Weekly Developments in Financial Markets – 13


FINANCIAL MARKETS DEPARTMENT

WEEKLY DEVELOPMENTS IN THE FINANCIAL MARKETS

(DECEMBER 13 – 17, 2021)

Main highlights

Gross official foreign exchange reserves declined by approximately $ 36.4 million close the review period at US $ 411.8 million (1.65 months of imports).

The Kwacha appreciated against the US dollar but lost value against the British pound, the euro and the South African rand. The local unit gained 0.09% (70 tambala) to close the review period at K 823.4654 to the US dollar.

Liquidity conditions on the domestic money market remained very tight with the daily average excess reserves of commercial banks, before borrowing from the central bank, with a negative average of K 116.1 billion per day.

Auctions of treasury bills and treasury bills have been considerably subscribedand sub-assigned. The cumulative ratio of allocations of Treasury securities to issues planned for the 2021/22 financial year fell to 44.63% from 45.01%.

Gross official foreign exchange reserves decreased by around US $ 36.4 million to end the review period at US $ 411.8 million (1.65 months of imports). This erodes the gain of US $ 51.6 million recorded in the previous week.

Activity in the retail foreign exchange market has accelerated given the levels generally observed during the lean season. AfDB purchased a total of US $ 37.11 million from its clients, compared to US $ 29.42 million recorded in the previous week. On the demand side, ADBs sold a total of US $ 37.22 million compared to US $ 28.57 million recorded the previous week.

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The Kwacha appreciated against the US dollar. In the process, the local unit gained 0.09% (70 tambala) to close the review period at K 823.4654 to the US dollar.

During the same period, the Kwacha lost value against the British pound, the euro as well as the South African rand.. The Kwacha lost value by 2.82% (K33.30), 5.31% (K55.42) and 1.76% (K1.03) against the British

Pound, Euro and South African Rand respectively.

Liquidity conditions on the domestic money market further tightened during the period under review as captured by the daily average of excess reserves of commercial banks, before borrowing from the central bank, which recorded a negative result of 116.1 billion K, against 85.5 billion K negative observed the previous week. Access to the Lombard facility increased to K 113.2 billion per day from K 109.9 billion per day. Likewise, trading in the interbank market was higher, dropping from K9.6 billion per day recorded in the week ending 10e December at K 11.1 billion per day during exam week.

IBR remains firm and closely aligned with policy rate at 11.98 percent. Thus, the IBR continues to be located in the target corridor of + 0.2 / -4.0percentage points around the key rate.

the year, to 44.63% against 45.01%, and an increase in the allocation / subscription ratio to 90.06% against 89.93%.

The central bank’s total operations with commercial banks contracted during the review week, removing a net K21.4 billion from the banking system. The central bank’s net foreign exchange operations removed a total of K 17.6 billion. Net issuance of government debt securities took another K 12.2 billion out of the banking system. On the other hand, a total of around K6.5 billion was injected through net lending on the Lombard facility, followed by net government operations of K2.0 billion. A reduction in the currency in circulation injected about K 0.2 billion.

Primary auctions of Treasury securities were largely under-subscribed and under-awarded.In the primary treasury bill auction, a total of K 4.3 billion was subscribed and fully allocated against a planned issue of K 16.0 billion. This represents a planned allocation ratio of 26. , 76%. During the week there was a reopening of three treasury bills. A total of KK 0.1 billion has been subscribed and fully allocated. The changes led to a decrease in the cumulative ratio of the allocation of Treasury securities to the issues planned for 2021/22

Warning

Reserve Bank of Malawi published this content on 22 December 2021 and is solely responsible for the information it contains. Distributed by Public, unedited and unmodified, on 22 December 2021 14:06:16 UTC.

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