Regulatory Alerts2020-01-01
CB Circular No. 6 of 2020: Adjustment to Open Market Operations Rules and Guidelines
The Bank of Zambia has amended its Open Market Operations framework to permit longer-term tenors beyond the previously mandated overnight basis. Overnight bids remain capped at plus or minus fifty basis points from the Policy Rate, while longer-term transactions require commercial banks to bid within fifty basis points of pre-announced maturity rates. These adjustments take immediate effect and leave all other existing rules unchanged.
# BANK of ZAMBIA
OFFICE OF THE DEPUTY GOVERNOR - OPERATIONS
BOZ/EXEC/DGO/fmkts/bp
February 24, 2020
CB Circular No. : 06/2020
To : All Heads of Commercial Bank
## ADJUSTMENT TO RULES AND GUIDELINES FOR OPEN MARKET OPERATIONS
Reference is made to the above subject matter and CB Circular No. 05/2018, wherein the Bank of Zambia made amendments to the Rules and Guidelines for Open Market Operations (OMO). In that circular, commercial banks were informed that all OMO transactions shall only be on the overnight tenor basis.
Kindly be notified that the Bank has made a further adjustment to the cited rules by allowing for OMO transactions beyond the overnight tenor. This means that Bank of Zambia, shall with immediate effect, also undertake longer-term OMO tenors when managing domestic liquidity as and when required.
Bids for the overnight tenor shall continue to be accepted at interest rates of no more than 50 basis points above or below the Bank of Zambia Policy Rate as is currently the case.
For OMO transactions beyond the overnight tenor, the Bank of Zambia shall pre-announce the interest rate applicable on each maturity tenor on offer. Commercial banks will be expected to bid at no more than 50 basis points above or below the pre-announced interest rate, as is the case with overnight OMO transactions.
All the other rules and guidelines remain unchanged.
For further details and clarifications, please contact the Director – Financial Markets.
**Francis Chipime (PhD)**
DEPUTY GOVERNOR – OPERATIONS
cc Governor
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Bank Square, Cairo Road, P.O. Box 30080, Lusaka, Zambia Tel: +260-211-399303, 399300, E-mail: dgo@boz.zm. Web: http://www.boz.zm
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