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The Zambian kwacha has surged nearly 1.5 percent against the US dollar this week, maintaining its position as Africa’s second-best performing currency in 2025, trailing only the Ghanaian cedi.
Buoyed by strong global copper prices, the kwacha had appreciated over 21 percent year-to-date, making it one of the top-performing currencies on the continent.
However, a market commentary by Access Bank Group had cautioned that recent trade data may signal emerging risks.
Read more: Kwacha weakens for second day amid dollar demand, limited FX supply
Zambia’s trade balance swung from a K1.5 billion surplus to a K5.3 billion deficit in June, raising concerns about the kwacha’s continued resilience.
“This shift threatens the kwacha’s resilience, as the mining sector—responsible for over 70 percent of Zambia’s foreign exchange—faces challenges from reduced copper output due to the 2024 drought’s impact on hydropower,” the commentary noted.
Lower copper production and subsequent reduced dollar inflows could place downward pressure on the currency, potentially echoing past episodes of depreciation.
Despite these concerns, Zambia’s diversification into solar energy, increased power imports, and promising rainfall forecasts for late 2025 offer hope for economic stability and recovery in copper production.
The commentary also credited the Bank of Zambia’s strategic interventions and increased offshore inflows with boosting liquidity and supporting the kwacha’s robust performance.
While trade deficit risks remained, Zambia’s proactive fiscal and monetary measures continue to position the kwacha as a standout performer in Africa’s foreign exchange markets.
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