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The Zambian kwacha recorded its third consecutive monthly gain against the United States dollar in May, appreciating by just over five percent, according to data from Bloomberg.
The local currency’s positive performance was supported by steady foreign exchange inflows from corporates, offshore investors, and sustained intervention by the Bank of Zambia, which collectively helped meet market demand throughout the month.
However, market analysts caution that rising demand for hard currency towards the end of June could erode some of these gains if foreign exchange liquidity tightens.
During Friday’s trading session, the kwacha faced renewed pressure against the greenback, driven largely by increased demand from merchandise importers and key players in the energy sector.
According to Absa Bank Zambia’s daily market report, the kwacha opened at K26.5500/26.6000 per dollar on the interbank market.
As trading progressed, it softened slightly, closing at K26.6000/26.6500 on the bid and offer, respectively.
“In the short term, the kwacha is expected to remain under pressure,” noted the market update. However, upcoming foreign exchange conversions by large corporates to meet tax obligations could provide some support to the local unit,” it said.
Meanwhile, the South African rand also posted a strong performance in May.
Despite slipping to levels above R18.0000/$ on Friday, the currency notched its best monthly gain since July 2023.
Commentary from Access Bank Group observed that while the rand’s recovery — following a sharp sell-off in April — appears stretched when compared to historical rallies, it could extend further if bullish momentum pushes the market below last week’s lows of R17.7500/$.
“This marks a critical technical support level for the USD-ZAR pair,” the commentary states by
Analysts expect investors to closely track price action in the coming sessions, with the USD-ZAR pair viewed as vulnerable to a rebound towards R18.5000 before resuming its longer-term downward trajectory.
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