Kwacha extends rally as dollar softens on global markets

The Zambian kwacha extended its gains against the United States (US) dollar for a second consecutive session on Thursday, buoyed by improved foreign exchange (FX) supply as corporates offloaded dollars to meet upcoming tax obligations.

The local unit appreciated by more than 2.0 percent, closing just below K23.400 per dollar.

A market commentary by Access Bank indicated that the kwacha was poised to sustain its upward momentum into next week, supported by a steady improvement in hard currency supply.

In its market update, Absa Bank noted: “The Kwacha opened Thursday’s session firmer at K23.750/23.800 and extended gains throughout the day, closing at K23.400/23.450 per US dollar — marking a 1.47 percent appreciation against the greenback.

The move was fuelled by strong offshore and corporate flows, with players positioning ahead of the bond auction and covering obligations in the fixed income market. Near-term price action is expected to remain range-bound, dictated by supply-demand dynamics and broader market sentiment.”

On the international front, the US dollar weakened against most G-10 currencies during Asian trading, with the DXY Index easing to 98.60.

This came as geopolitical tensions moderated following US President Donald Trump’s indication that a decision on potential military action against Iran would be made within two weeks, leaving room for possible diplomatic engagement.

The dollar index slipped by 0.2 percent, extending a second day of losses, while 10-year US Treasury yields held steady as markets reopened after a public holiday.

Despite the temporary relief, analysts warned that geopolitical risks remain under-priced and could still support the greenback in the coming sessions.

Notably, one-week risk reversals turned sharply dollar-bullish, reflecting a potential shift in market sentiment despite the currency’s recent softness.

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