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Banking sector liquidity stable

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Liquidity levels in the banking sector continue to be stable evidenced by steadiness in levels of interbank borrowing and lower levels of borrowing from the the central bank as lender of last resort through the Lombard facility.

According to a weekly financial update from Nico Asset Manager for the week ending July 22 2022, excess reserves after central bank operations increased to a daily average of K25.36 billion from K19.51 billion recorded in the previous week.

The report further notes that the volume on interbank overnight borrowing decreased to a daily average of K27.16 billion at 12.5 percent from K27.31 billion registered during the previous week at 12.5 percent.

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“Access to Lombard facility during the week in review averaged K24.5 billion at an average rate of 14.2 percent from K33.66 billion from the previous week at 14.2 percent,” reads the report.

Financial Market Dealers Association (Fimda) Vice Preside Jim Kalua attributed the development to development projects that government is implementing across the country.

Kalua added that the development means that market players have managed to be squaring positions amongst themselves

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“We expect continued spending from government therefore there could be some levels of liquidity in the market. Government has also recently been rolling over maturity treasury instruments hence not much on mopping of liquidity,” he said.

Positive liquidity in the banking sector helps to reduce the cost of borrowing.

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