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The Zambian Kwacha has come under renewed pressure in March, mirroring a broader decline across African currencies as escalating tensions in the Middle East continue to unsettle global financial markets.
Heightened geopolitical risks have driven investors toward safe-haven assets, particularly the US dollar, weakening emerging and frontier market currencies, Access Bank group reports in its market commentary.
The situation intensified this week after Iran reportedly targeted energy facilities in the Gulf in retaliation for Israeli strikes on its own gas infrastructure, further amplifying global risk aversion.
“On a month-to-date basis, the kwacha has depreciated by about 4.0 percent against the US dollar, effectively wiping out the 4.82 percent gains recorded in February,” it stated.
The latest downturn placed the Kwacha among the worst-performing currencies on the continent.
Read more: Kwacha steady but vulnerable as tight liquidity and oil market swings shape outlook
According to data tracked by Bloomberg, it was now the third weakest in a basket of 23 African currencies, trailing the Ugandan shilling, South African rand and Egyptian pound, which have recorded sharper losses.
Analysts attribute the Kwacha’s weakness not only to global uncertainty but also to persistent domestic liquidity constraints.
Market conditions continue to favour the US dollar, with demand for foreign currency remaining elevated against relatively limited inflows.
With these pressures expected to persist in the near term, the local currency is likely to remain on the back foot.
Meanwhile, developments in global commodity markets have added another layer of complexity.
Prices of key base metals, including copper and aluminium, showed signs of recovery after steep losses earlier in the week.
The rebound followed reassurances from Benjamin Netanyahu and Donald Trump, which helped ease fears of a broader escalation in the Middle East conflict.
Earlier declines had been driven by surging oil prices and concerns that rising energy costs could dampen global economic activity and reduce demand for industrial commodities.
Although the conflict poses potential supply risks—particularly for aluminium, with a significant share of global output originating from the Gulf region—market sentiment has largely been weighed down by concerns over weakening demand and the possibility that inflationary pressures could prompt tighter monetary policy by central banks.
By Friday, copper prices had risen by about 1.2 percent, while aluminium gained approximately 1.1 percent.
Despite the modest recovery, both metals remain on course for their steepest weekly declines this year, underscoring ongoing volatility in global commodity markets.
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