Money circulated more intensely between banks, the volumes of dollars traded grew and the funds parked at the Bank of Mozambique fell sharply. Even so, between 10 and 15 September, one of the market's main reference points remained practically unmoved: the price of the dollar.
Interbank money market data show, at the same time, a gradual reduction in the national-currency liquidity deficit. The position remained negative, but the gap between bank reserves and required reserves narrowed by about 1.83 billion meticais during the period analysed.
On 10 September, the Bank of Mozambique recorded a negative deviation of 6.66 billion meticais. Just one day later, the deficit had already fallen to 6.25 billion.
The trend continued. On 14 September, the figure fell back to 5.17 billion and, on the 15th, stood at negative 4.83 billion meticais.
Over four observations, the banking system thus remained in deficit in national currency but consistently reduced the size of that imbalance. In parallel, the average effective rate of required reserves in national currency rose from 37.88% to 38.16%.
Banks withdraw funds from the deposit facility
It was, however, in the Standing Deposit Facility that one of the period's most striking movements was recorded.
On 10 September, commercial banks held 4.17 billion meticais deposited in this Bank of Mozambique facility. The next day, the amount fell to 3.58 billion.
The reduction continued in the following bulletins: 2.59 billion meticais on 14 September and only 1.80 billion on the 15th.
Between the first and last observations, approximately 2.38 billion meticais disappeared from this facility, a fall of close to 57%.
The same movement is visible in the Treasury Bills associated with the Standing Deposit Facility. The corresponding amount fell from 4.37 billion to 1.83 billion meticais.
The figures thus show that a progressively smaller share of the available liquidity remained placed with the Central Bank during the days analysed.
Very short-term credit remains active
While the funds deposited at the Bank of Mozambique decreased, the redistribution of money between financial institutions remained active.
In repo operations between commercial banks, the amounts handled fluctuated between 1.2 billion and 1.43 billion meticais. On 15 September, these operations closed at 1.365 billion.
Despite the fluctuations in the amounts, the price of money did not change. The weighted average rate of repo operations remained at 9.25% throughout the period.
The Standing Lending Facility also showed movement. The amount went from 2.6 billion meticais on the 10th to 3.1 billion the next day, before falling back to 2.9 billion, the level at which it remained on 15 September.
The combination of the three indicators — recourse to lending facilities, repo operations and the reduction in deposits held at the Central Bank — portrays a banking system actively redistributing liquidity to address differences between institutions.
Banks step up dollar purchases
The movement was even more evident in the foreign exchange market.
In the specific dollar segment, purchases made by banks from the public more than doubled between 10 and 11 September, rising from US$15.36 million to US$31.57 million.
On 14 September, they reached US$44.78 million, the highest of the four observations, before falling back to US$33.11 million on the 15th.
Sales also fluctuated, but one element is common to all the days analysed: the banks always ended with a net buying position in dollars.
On 10 September, they bought US$15.36 million and sold US$11.10 million, leaving a net purchase balance of US$4.26 million. The next day, purchases reached US$31.57 million, against sales of US$15.48 million, producing a positive balance of US$16.09 million.
On 14 September, US$44.78 million was acquired and US$38.70 million sold, resulting in a net buying position of US$6.08 million.
On the last day observed, 15 September, the banks bought US$33.11 million and sold US$16.80 million. The net purchase balance then reached US$16.30 million.
Adding up the four observations, the banking institutions acquired approximately US$124.8 million from the public and sold around US$82.1 million.
The difference left the banks with a net purchase balance of close to US$42.7 million, according to the daily data in the Bank of Mozambique bulletins.
Metical remains practically unmoved
The strong movement recorded in foreign exchange transactions was not matched in the US currency's quoted price.
Throughout the four bulletins analysed, the reference rate remained unchanged: 63.27 meticais per dollar buying and 64.54 meticais selling, corresponding to an average rate of 63.91 MZN/US$.
At commercial banks, the changes were equally small.
The average rate fluctuated only between 63.94 and 64.10 meticais per dollar, ending the period at 63.94 MZN/US$.
This means that, despite the increase and fluctuations in the volumes of foreign currency traded, there was no material change during this interval in the dollar rate applied by the banking system.
Bureaux de change fluctuate more
Outside the commercial banks, the picture showed greater volatility.
At bureaux de change, the average rate stood at 70.51 MZN/US$ on 10 September. A day later, it fell to 69.29 meticais.
On 14 September, it rose again, reaching 70.79 meticais per dollar, before falling back once more to 69.20 meticais on the 15th.
The fluctuations maintained a significant gap between the average rate charged by bureaux de change and that observed in the banking system.
The behaviour of the two segments was thus distinct: while bureaux de change recorded more pronounced movements, commercial banks went through the period with relative exchange-rate stability.
State keeps portfolio fully used
In Treasury Bills, the stability was even more evident.
The value discounted by the State remained at 154.07 billion meticais throughout the period analysed. The outstanding balance remained at exactly the same amount, corresponding to a proportion of 100%.
There was also practically no change in the banks' position in the primary Treasury Bills market.
Between 10 and 15 September, the amount went from approximately 144.15 billion to 144.20 billion meticais.
More money moving, rates unchanged
The figures in the four bulletins together paint a picture of a market with greater circulation and internal redistribution of funds, but without relevant changes in the main short-term rates.
The national-currency liquidity deficit narrowed from 6.66 billion to 4.83 billion meticais, while the funds held in the Standing Deposit Facility fell by about 57%.
At the same time, the banks continued to use repo operations and the Central Bank's lending facilities, in a period in which they also stepped up their net acquisition of US currency from the public.
Neither this greater activity nor the net purchase balance of approximately US$42.7 million was enough to cause a relevant change in the exchange rate applied by the banking system.
Between 10 and 15 September, the picture left by the indicators is therefore marked by two simultaneous movements: more liquidity and foreign currency circulating between the various players, while the price of money and the banks' dollar quotation remain practically stable.
