The mandate of the Department of Financial Markets is to manage the country’s reserves and develop domestic money and capital markets. The Central Bank of Lesotho (the Bank) through the Department promotes the development of financial markets in Lesotho through managing official foreign reserves, implementation of monetary policy through Open Market Operations, and contracting and managing the Government’s domestic debt through issuance and redemption of Treasury Securities. Recent establishment of Maseru Securities Market trading platform will go a long way in deepening the market and enhancing secondary market activities.
The Department consists of two (2) Divisions namely; Reserves and Market Operations, and Market Risk and Development.
a) Reserves and Market Operations Division
Through the Department of Financial Markets, the Bank is mandated by section 6 (f), of the Central Bank of Lesotho Act of 2000 to own, hold and manage its official international reserves. The primary motive of the Bank for holding reserves is to maintain the value of the Loti (LSL) and to be in a position to settle the country’s international obligations promptly.
The functions of the Market Operations Division include the following:
- To Maintain and manage the foreign exchange reserves at adequate levels to facilitate the foreign transactions for Lesotho;
- To coordinate all trading and other related activities on the trading floor and provide support to broking and dealing clients; and
- To undertake securities’ auctions to support monetary policy operations.
b) Market Risk and Development Division
The functions of the Market Risk and Development Division include the following:
- To provide analytical support to reserves management function in order to meet the objectives of holding of reserves;
- To prepare and monitor strategies for portfolio management;
- To monitor the risk exposure of reserves against set risk parameters in line with the Bank risk tolerance; and
- To initiate and manage developmental projects to domestic financial markets.