Kwacha projected to trade favourably as economic stability improves

The Zambian Kwacha is expected to trade favourably in the near term as Zambia shows early signs of economic stabilization.

This outlook follows a Bank of Zambia (BoZ) statement attributing the slowed depreciation of the Kwacha in the first quarter of 2025 to improved foreign exchange supply, mainly from the mining sector.

Despite this, Absa Bank Zambia reported that the Kwacha remained under pressure against the US dollar in Friday’s trading session, opening at K27.280/27.330 per USD and closing slightly weaker at K27.300/27.350.

“We anticipate the Kwacha to trade favourably as the economy stabilizes,” Absa stated, citing the Monetary Policy Committee’s (MPC) decision on May 21–22, 2025, to maintain the policy rate at 14.5 percent following a decline in inflation to 16.5 percent.

The MPC also highlighted that increased foreign exchange from mining contributed to moderating the Kwacha’s depreciation earlier this year.

Meanwhile, Access Bank noted further weakening of the Kwacha during the week’s final trading session, forecasting continued pressure due to rising foreign currency demand and subdued inflows.

Bloomberg data showed the Kwacha briefly breached the 200-day simple moving average (SMA) of 27.4688 intraday but closed at K27.4089, down 0.45 percent on the day.

As market watchers track foreign exchange trends and economic signals, cautious optimism surrounds the Kwacha’s near-term prospects.

WARNING! All rights reserved. This material, and other digital content on this website, may not be reproduced, published, broadcast, rewritten or redistributed in whole or in part without prior express permission from ZAMBIA MONITOR.