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Reports say the Zambian kwacha has shown signs of stabilising in recent weeks as the country moves closer to concluding its long-awaited debt restructuring programme.
On Tuesday, the local currency strengthened against the US dollar, supported by month-end foreign exchange inflows.
It opened trading on the interbank market at K27.9000/27.9500 per dollar.
However, uncertainty remains over a dispute involving two African multilateral lenders—the Eastern and Southern African Trade and Development Bank (TDB) and Afreximbank—which could delay Zambia’s exit from default.
Despite this, it is widely expected that the debt restructuring will be finalised by the third quarter of 2025.
A market analysis by Access Bank noted that while recent currency gains were encouraging, tight liquidity conditions continue to weigh on the kwacha.
Further economic pressure has come from prolonged drought, which has slashed hydropower generation—Zambia’s primary energy source—disrupting the mining sector.
With mining accounting for more than 70 percent of the country’s foreign exchange earnings, reduced production has weakened dollar inflows, intensifying pressure on the kwacha.
“Last week’s trade balance data illustrated this impact,” Access Bank analysts observed. “March recorded a trade surplus of just K0.6 billion, a sharp drop from the K10.0 billion surpluses recorded in 2021.”
Despite these setbacks, analysts remain cautiously optimistic. Commodity exports are expected to recover once drought conditions ease, and shifting global trade dynamics could play in Zambia’s favour.
Although the US is not a major buyer of Zambian copper, trade policies like tariffs introduced under former President Donald Trump could push global copper prices higher, benefiting exporters like Zambia.
With global demand for copper projected to rise as economies transition from fossil fuels, the International Energy Agency forecasts a 30 percent supply shortfall by 2035.
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