Kwacha Selling on Positive Effects
The Zambian Kwacha has experienced a dynamic performance throughout 2025, marked by early-year volatility followed by a strong and sustained recovery driven by improvements in key economic sectors and enhanced policy measures.
During the first quarter of 2025, the Kwacha came under pressure due to elevated foreign-currency demand for imports and delayed mining inflows, weakening to record-low levels.
However, from the second quarter onwards, the currency began a notable rebound, supported by improved copper exports, stronger agricultural output, and increased investor confidence.
By mid-2025, the Kwacha had appreciated significantly, with gains of nearly 10% over a short period—a trend that continued into the third and fourth quarters.
By October and November, the currency had reached its strongest levels since early 2024, reflecting increased foreign-exchange supply and tighter monetary conditions implemented by the Bank of Zambia.
Key drivers behind the Kwacha’s recovery include:
Improved mining production and export receipts, particularly in copper, which boosted foreign-exchange inflows.
A stronger agricultural season, which reduced import dependence and supported local supply.
Effective monetary policy actions by the Bank of Zambia aimed at stabilising inflation and managing liquidity.
Renewed investor confidence stemming from improved macroeconomic coordination and commitments to structural reforms.
While this performance signals a positive trajectory, the Kwacha remains sensitive to fluctuations in global commodity prices, the trade balance, and broader external economic conditions.
Sustaining the currency’s gains will require strengthened export capacity, continued fiscal discipline and diversification efforts to reduce dependence on mining.
Overall, 2025 marks a year in which the Kwacha demonstrated resilience and regained strength, offering renewed confidence to markets, businesses and households.
