RBM mops up K180bn excess liquidity

The Reserve Bank of Malawi (RBM) withdrew K180 billion from the banking system through Open Market Repurchase Agreements (OMO Repos) in the week ending July 24 as part of efforts to manage liquidity in the financial sector. The liquidity withdrawal came during a week in which the central bank also raised K21.85 billion through Treasury Bill auctions after receiving applications worth K64.78 billion, according to Bridgepath Capital's Malawi Financial Market Update, quoting RBM figures. Meanwhile, almost all Treasury Bill applications were for the 364-day tenor, accounting for 99.74 percent of applications. Commenting on the development, economist Marvin Banda said the operation suggested that banks were holding excess short-term liquidity. "Mopping up that liquidity is consistent with the Reserve Bank of Malawi's efforts to contain inflation and stabilise monetary conditions. In that sense, the move is justified," Banda said. He, however, said while the move pointed to excess liquidity in the banking sector, it also highlighted the contrast that banks were holding surplus funds at a time businesses continued to struggle to access affordable credit. Banda said the size of the liquidity withdrawal also indicated that lenders still preferred investing in government securities rather than extending loans to businesses. "While weak credit demand is part of the story, it is not the whole story. Until the business environment improves, banks will continue to favour safety over enterprise," he said. The operation comes against the backdrop of easing inflation, where headline inflation has declined from 24.9 percent in January to 21.1 percent in June this year, although it remains elevated. Bridgepath Capital data also show that, over the same period, the Kwacha has remained relatively stable, with the middle exchange rate standing at K1,734.01 to the United States dollar as of July 24, 2026, compared to K1,749.93 in June. Meanwhile, the central bank has, so far, maintained the Policy Rate at 24 percent since March this year, a tight policy stance yet a slight easing from 26 percent the previous months. OMO is one of RBM's monetary policy tools, which is commonly used to absorb excess cash from commercial banks in order to regulate money supply, support price stability and keep short-term interest rates aligned with its policy objectives

WIRE — The Reserve Bank of Malawi (RBM) withdrew K180 billion from the banking system through Open Market Repurchase Agreements (OMO Repos) in the week ending July 24 as part of efforts to manage liquidity in the financial sector. The liquidity withdrawal came during a week in which the central bank also raised K21.85 billion through Treasury Bill auctions after receiving applications worth K64.78 billion, according to Bridgepath Capital's Malawi Financial Market Update, quoting RBM figures. Meanwhile, almost all Treasury Bill applications were for the 364-day tenor, accounting for 99.74 percent of applications. Commenting on the development, economist Marvin Banda said the operation suggested that banks were holding excess short-term liquidity. "Mopping up that liquidity is consistent with the Reserve Bank of Malawi's efforts to contain inflation and stabilise monetary conditions. In that sense, the move is justified," Banda said. He, however, said while the move pointed to excess liquidity in the banking sector, it also highlighted the contrast that banks were holding surplus funds at a time businesses continued to struggle to access affordable credit. Banda said the size of the liquidity withdrawal also indicated that lenders still preferred investing in government securities rather than extending loans to businesses. "While weak credit demand is part of the story, it is not the whole story. Until the business environment improves, banks will continue to favour safety over enterprise," he said. The operation comes against the backdrop of easing inflation, where headline inflation has declined from 24.9 percent in January to 21.1 percent in June this year, although it remains elevated. Bridgepath Capital data also show that, over the same period, the Kwacha has remained relatively stable, with the middle exchange rate standing at K1,734.01 to the United States dollar as of July 24, 2026, compared to K1,749.93 in June. Meanwhile, the central bank has, so far, maintained the Policy Rate at 24 percent since March this year, a tight policy stance yet a slight easing from 26 percent the previous months. OMO is one of RBM's monetary policy tools, which is commonly used to absorb excess cash from commercial banks in order to regulate money supply, support price stability and keep short-term interest rates aligned with its policy objectives

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