Kwacha under pressure as falling copper revenues weaken Zambia’s trade balance

The Zambian kwacha continues to face depreciation pressure in the short term, weighed down by declining copper revenues that have weakened the country’s external position, financial analysts say.

Copper accounts for roughly 70 percent of Zambia’s foreign exchange earnings, and the recent slump in global copper prices has heightened concerns over the sustainability of the local currency.

In a research note, Access Bank Group analysts said Zambia’s currency outlook remains under pressure but could improve over time if the country diversifies its export base or expands domestic copper refining capacity to capture more value locally.

“Persistently low copper prices pose a significant risk to Zambia’s currency stability, with potential implications for debt repayment and long-term development goals,” the bank cautioned.

Despite the broader pressure, Absa Bank Zambia reported modest gains for the kwacha on Wednesday, buoyed by increased foreign exchange demand linked to tax remittances.

The local unit opened trading at K24.330/24.380 per US dollar and firmed slightly to close at K24.280/24.330 on the interbank market.

“The kwacha is expected to remain range-bound in the near term as liquidity levels and market flowscontinue to drive direction,” Absa said in its daily market update.

Meanwhile, on the international front, the US dollar weakened against all its G-10 currency peers early Wednesday after former U.S. President Donald Trump confirmed a 50 percent tariff on copper imports, effective August 1.

The move, part of broader protectionist measures, raised global market jitters and prompted investors to shift to safe-haven assets like the Japanese yen, which led G-10 gains. The DXY Index, which tracks the dollar against major currencies, slipped 0.11 percent.

Zambia, a major copper producer, is particularly exposed to fluctuations in the global commodities market, and the mounting trade tensions add another layer of uncertainty to its economic outlook.

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