Kwacha holds firm as gains cement currency’s strong October performance

Consolidation defined trading on Tuesday as the Zambian kwacha closed relatively unchanged, just below the K22.10 per US dollar mark.

According to Access Bank Group’s daily market commentary, the local unit maintained its footing after a period of strong appreciation that has seen it rise by more than 8 percent on a month-to-date basis.

“Pulling back the lens, it has been a stellar month for the Zambian kwacha,” the report noted, adding that the currency now ranks as “the third-best-performing African currency against the USD, tracked by Bloomberg.”

The Kwacha’s strong showing reflects improved foreign exchange liquidity and positive sentiment surrounding Zambia’s ongoing debt restructuring process, which continues to attract investor confidence.

Market analysts suggest that sustained inflows from the mining and agricultural sectors, coupled with stable monetary policy, have also contributed to the unit’s resilience.

Meanwhile, in South Africa, fiscal performance has outpaced expectations, providing further optimism for the region. Access Bank Group observed that tax revenue in the first half of the fiscal year reached R925 billion, surpassing the projected R907 billion — a 9.3 percent year-on-year increase.

“The surplus was bolstered by domestic VAT receipts, corporate provisional taxes, and PAYE contributions,” the commentary stated. It further noted that “withdrawals from the two-pot retirement system contributed R6 billion in additional levies,” while improved voluntary compliance and customs duties on clothing imports added to the gains.

The report highlighted that these fiscal improvements may lead to a better-than-expected outcome in the upcoming Medium-Term Budget Policy Statement (MTBPS), potentially easing government debt issuance pressures and supporting lower bond yields.

“With fiscal consolidation and strong revenue performance, South Africa may be setting the stage for a virtuous cycle — where bond market inflows strengthen the rand, dampen inflation, and further enhance investor confidence,” Access Bank Group concluded.

For Zambia, market watchers will be keeping a close eye on whether the Kwacha can maintain its upward momentum as month-end approaches, particularly amid global dollar volatility and shifting commodity prices.

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