CSPR Predicts Stable Kwacha Backed by Strong Commodity Prices
The Civil Society for Poverty Reduction (CSPR) has projected a modestly stable outlook for the Zambian Kwacha against the US Dollar in the near term, citing steady commodity prices and sustained mining inflows as key stabilising factors.
According to CSPR’s latest analysis, the local currency’s recent strong performance is commendable and, if maintained, could help ease inflationary pressures and improve the affordability of goods and services for most Zambians. The organisation noted that a stronger Kwacha also lowers the cost of servicing external debt, providing relief to government finances.
“Our view is that speculative positions are gradually unwinding, and while short-term volatility is possible, the Kwacha is likely to trade within a narrow band,” said Isabel Mutembo Mukelabai, CSPR Executive Director.
CSPR’s baseline projection suggests the Kwacha will move within a range of approximately 1.5% weekly, supported by copper and cobalt exports, as well as USD-denominated tax payments from the mining sector. A stronger upswing could occur if commodity prices maintain momentum, while downside risks could emerge from global oil price spikes or shifts in investor sentiment.
The organisation also identified key developments to monitor, including fluctuations in global copper and cobalt prices, midweek mining payments, oil market volatility, and the upcoming sixth review of Zambia’s Extended Credit Facility (ECF) with the International Monetary Fund (IMF). A favourable IMF outcome could bolster investor confidence and foreign currency inflows, especially during the farming input procurement season.
CSPR further urged the government to maintain fiscal discipline amid election-year pressures, ensure transparency in debt management, and address power supply challenges that could undermine productivity and currency stability.
“The performance of the Kwacha will largely depend on how effectively Zambia manages its macroeconomic fundamentals while navigating both domestic and global pressures,” Mukelabai concluded.
