Kwacha extends gains, ranked Africa’s best-performing currency

The Zambian Kwacha extended its rally for a second straight session on Thursday, maintaining a firm footing on the back of strong foreign currency inflows and market interventions by the Bank of Zambia.

According to Bloomberg data, the local unit appreciated by 0.51 percent, closing marginally above K24.6000 to the US dollar.

On a month-to-date basis, the Kwacha has gained nearly 8.0 percent, making it Africa’s best-performing currency, as tracked by Bloomberg.

Access Bank Group attributed the currency’s strength to increased dollar inflows from offshore investors and the central bank’s strategic support measures.

“These inflows have bolstered market liquidity, meeting much of the pent-up demand for foreign exchange,” the bank noted.

In its daily market commentary, Absa Bank Zambia reported that the Kwacha opened Thursday’s session at K24.650/24.700 before firming to K24.550/24.600.

The local currency held these levels throughout the day, closing 10 ngwee stronger.

“In the near term, the Kwacha is expected to trade within a stable range, with market dynamics and investor sentiment likely to influence its direction,” Absa stated.

Meanwhile, global markets recoiled overnight following Israeli strikes on Iran. Oil prices surged, equities retreated, and safe-haven assets like gold approached record highs.

The South African rand weakened, breaching 17.9500 against the dollar and eyeing a move towards 18.1900.

Investors shifted toward US assets ahead of South Africa’s long weekend, unwinding short dollar positions amid renewed geopolitical risks.

While heightened risk aversion is driving near-term demand for the US dollar, analysts cautioned that longer-term headwinds, including US fiscal challenges, trade imbalances, and an overvalued greenback remained a drag on the currency’s outlook.

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