LUSAKA (The Business Telegraph) – The central bank in Africa’s red metal hotspot on the 12 August named authorised brokers for foreign exchange trading in line with its revised trading guidelines. In a memo to commercial banks the Bank of Zambia office of the Deputy Governor Operations named ICAP Broking Services Ltd, GFI Africa Money Market Brokers Ltd, Emerging Markets New York and Continental Capital as authorised brokers.
For a long time the Zambian market operated without clear cut approval process for approving brokers let alone traders were still able to trade but by reaching out to fellow dealers in the system.
Read more: Weak capacity of local investors weigh as Zambia maintains 8th place of the AFMIndex
Metamorphosis of the currency market. The copper producer has undergone a significant evolution in its foreign exchange trading framework this year ranging from a ‘crawling peg’ to curb volatile swings earlier in the year to ‘dollarization’ of mining taxes to ‘making traders personally liable for steep swings’ to then naming of currency brokers. It was forecast by some analysts that the BOZ could have been graduating onto a managed float earlier while this has not been the case. Zambia remains one of Africa’s most liquid foreign exchange floating regimes second to South Africa according to the AFMIndex which last rated it at 61/100. These measures the central bank has placed in response to swings in exchange rate which were observed in the year prompting a revision in its Interbank Foreign Exchange Market – IFEM framework to reign in on volatility. It may appear prima facie as though trading through authorised brokers may deepen visibility but some traders believe the central bank did not fully comprehend the full role of brokers in the market at a time when the Kwacha slide persisted earlier in the year. The central bank will on an annual basis review the brokers list annually.
The Kwacha Arbitrageur